How quickly equity can be released?

[Proprtyhunter]

My current lender approved a $200K equity loan but the funds only be released for buying a land (their credit policy). I am planning to buy a land costing 350K soon. Since the full equity has to used for the purpose of buying a land, I am going to use $200K equity and 150K loan from another lender to settle the property.

I would like to know how easy to release equity from other lenders immediately after settlement? I want to use the equity to construct a house as an owner builder.

 

[Mick C]

My current lender approved a $200K equity loan but the funds only be released for buying a land (their credit policy). I am planning to buy a land costing 350K soon. Since the full equity has to used for the purpose of buying a land, I am going to use $200K equity and 150K loan from another lender to settle the property.

I would like to know how easy to release equity from other lenders immediately after settlement? I want to use the equity to construct a house as an owner builder.

^ Why dont you

1. Release $200,000 equity...and than apply for an 80% loan on the land = $350x0.20= use up only $70,000 + Stamp duty of your $200,000 equity...

= ~$115,000 left from your equity, RATHER than use the full $200,000???

2. Than apply for an owners occupied build loan using the $115,000 as the deposit.

-------

Releasing equity- Normally 3-6 month, but can as short as 6 weeks if the right lender is used ( ie a no val policy lender etc..)

 

[jonmardell]

With a lot of lenders you can release the equity immediately and will often use the same valuation. You will just need to make sure the lender allows cash out unlike the lender you got the 200K from. Which lender is it?
Jon

My current lender approved a $200K equity loan but the funds only be released for buying a land (their credit policy). I am planning to buy a land costing 350K soon. Since the full equity has to used for the purpose of buying a land, I am going to use $200K equity and 150K loan from another lender to settle the property.

I would like to know how easy to release equity from other lenders immediately after settlement? I want to use the equity to construct a house as an owner builder.

 

[Proprtyhunter]

With a lot of lenders you can release the equity immediately and will often use the same valuation. You will just need to make sure the lender allows cash out unlike the lender you got the 200K from. Which lender is it?
Jon

Thanks Jon. This is one of the smaller lenders. They are very good otherwise. So I don't want to mention their name here. I am fine here as I am getting cheap money from my current lender.

 

[Proprtyhunter]

^ Why dont you

1. Release $200,000 equity...and than apply for an 80% loan on the land = $350x0.20= use up only $70,000 + Stamp duty of your $200,000 equity...

= ~$115,000 left from your equity, RATHER than use the full $200,000???

2. Than apply for an owners occupied build loan using the $115,000 as the deposit.

-------

Releasing equity- Normally 3-6 month, but can as short as 6 weeks if the right lender is used ( ie a no val policy lender etc..)

Thanks Michael for the clear steps.

 

[Shahin_Afarin]

Depends on the lender - whose the lenders?

 

[Peter_Tersteeg]

It sounds like the lender is trying to control the funds. They're probably not going to release any money until you need it for the deposit and settlement. They intend to manage it for you and it's unlikely the equity will never actually be available as cash.

This is not an uncommon problem depending on the lender, LVR and amount of cash you're after.

 

[Bandita]

Releasing equity- Normally 3-6 month, but can as short as 6 weeks if the right lender is used ( ie a no val policy lender etc..)

Hi, sorry to hijack, but what do you mean by a "no val policy lender"?

Thanks

 

[Mick C]

if you want to release equity the next day from settlement it does come down to the lender you choose and how you submit the loan.

Most lenders will only take on a new valuation 3-6 month from the old valuation date.

Ie

A no val policy lender = a lender that will NOT carry out a valuation from the purchase so will take the purchase price.

Example: Contract for a purchase of $400,000

1 week after settlement, we can than order a FULL valuation and if it values at $450,000 than you got equity that you can cash out on.

 

[Peter_Tersteeg]

Hi, sorry to hijack, but what do you mean by a "no val policy lender"?

Thanks

There are lenders that under the right circumstances will simply use the results from an RPData or Residex report, or they may rely on the figure from the contract of sale.

It usually doesn't work for an equity release or high LVR lending.

 

[Bandita]

It usually doesn't work for an equity release or high LVR lending.

Thanks, this is what I'm most curious about (for instance with refinancing with a new lender) - does 'no val' happen? is St George considered a no val lender? If not, any other of the major banks? And if so, what's considered high LVR?

Thanks

 

[Jamie M]

Hi Bandita

Generally for any refi above 80% the bank is usually going to want a full valuation.

At 80% and below you'll get some lenders that will simply go off a desktop val that brokers can generate.

Cheers

Jamie

 

[Aaron_C]

Depends on the lender - whose the lenders?

This is something that Firstmac does which is terrible.

 

[Rolf Latham]

Most lenders do have a 90 day to 180 day embargo on reval or equity pull depending on val and LMU DUA

ta
rolf