loan 100% and put deposit in offset

[wish-ga]

Hi friends
I want to buy my 1st property with an interest only loan and borrow 100% of the amt and put the deposit (that I have saved as genuine savings) in an offset account (to use as a deposit for my next ppor when I convert this one to an ip). What lending establishments will do this?

Comm Bank tells me they don't take cash as security - how amusing and interesting??? Okay, so they are off the list. What next?

Can people point me in the right direction? I know what I want to do I just need a lending establishment that will make it happen.

Thanking you in advance

 

[Sim]

Good luck. Please let us all know if you find one.

Personally I doubt you will - since there is almost no security left for the lender. If you do manage to do this, I'm guessing the lender will go for an extremely conservative valuation to protect themselves, or else will charge you a much higher interest rate to cover their risks. You can draw the money out of the offset account at any time leaving the bank with nothing but a 100% lend an no safety margin on their exposure - very bad business practice for them.

Now, putting the cash in a term deposit which the lender would hold a mortgage over is another matter - basically you wouldn't be able to touch the money until the lender agrees that your property has increased in value enough to be able to stand alone and can then release the term deposit security. I don't know any lender who do this, but I have heard someone claim they managed to - so it might be possible. I think this kind of defeats your purpose though ?

Please don't let me stop you trying, and like I said if you do manage to do what you described, we would all love to know how.

 

[Aceyducey]

Wish-ga,

Go see a good mortgage broker, but Sim is right.

Surely you can find a different way to do this which lenders will be more amenable to.

Cheers,

Aceyducey

 

[wish-ga]

Acey it is a matter of finding a new mortgage broker that will do this for me. I had a pre approved loan for P&I loan but now I want to do it this way my broker is unable to accommodate.

Thanks Sim!

I played 20 questions with Comm Bank & they agreed that I could get a personal loan for the 15,000 that I want to keep in an offset account and that way reimburse myself but I think it is not the ideal way. I am still searching.

Anyone else?

 

[Corsa]

Acey it is a matter of finding a new mortgage broker that will do this for me. I had a pre approved loan for P&I loan but now I want to do it this way my broker is unable to accommodate.

Thanks Sim!

I played 20 questions with Comm Bank & they agreed that I could get a personal loan for the 15,000 that I want to keep in an offset account and that way reimburse myself but I think it is not the ideal way. I am still searching.

Anyone else?

Hi Wish-ga, I can see what you are trying to do, but I think getting a loan for 100% of the purchase price and then have your deposit to buy something else, doesnt really gel with me as a viable option and would be very risk for the banks as a proposition. I would support a loan of 80/90% and your deposit may come from a personal loan etc (but not as direct as that for bank purposes), and then have your deposit to buy something else. Of course CBA dont take security over cash, it is liquid and they cant control it, no bank would agree to this. Good luck....

Corsa

 

[wish-ga]

Idea wasn't that I keep the money. I can understand the banks thinking I would spend it. You tie it up in term deposit and they give you the funds in lieu of this amount that you put up as security.

I understand there is flaws but I was of the understanding that some people have done it and thought some friends here may have done it or known someone who did it.

I will get my first purch off the ground it is just a matter of how. I will keep exploring. It is all learning.

 

[Sim]

Keep at it wish-ga ... a bit of lateral thinking and clever negotiation might open some useful doors. Sorry I can't offer anything more practical.

(ps. be careful not to spend too long analysing or getting too fancy with your finances - this path leads to the dreaded "analysis paralysis" - I've been there )

 

[Corsa]

No worries Wish-ga

I really hope that this first purchase works out for you and that you get all the detail worked out. It can be tricky working out how to 100% finance but I am sure based on the help you have been getting from other posts and this post that you will get there.

Keep us updated on how you go

Good luck

Corsa

 

[Les]

G'day Wishga,

Good luck in your search. I wondered, while reading this, if you were thinking of oft-quoted comments we make on the forum about people borrowing 105% ?? AFAIK, this only occurs when people already hold other property that has spare equity. I've not heard this work for a first property.

The best I'd heard of was ANZ, who would lend 95%, AND allow LMI to be capitalised too (thus nearer 97%) - but I believe that will be P&I (haven't checked it out, though, so could be wrong).

Regards,

 

[qaz]

I laugh when they say the deal was positive cashflow too. When obviously its the whole portfolio that is positive cashflow. Not the purchase itself.

 

[crest133]

Hi Wishga
During recent commercial loan negotiations with ANZ, they agreed to me placing an amount in term deposit which would reduce my LVR to a point within their lending criteria. The amount was $35K. In the end, I went with St George because they had a better overall deal, but ANZ definately took the $35K into their LVR calculations. Hope it helps.
good luck
cheers
crest133

 

[Boyler_Room]

Les,

With regard to the 105% loans, I know Assured in Adelaide were offering such a product at one stage (not sure if they still do) for ppl with annual income in excess of $95k.

That was a little while ago and can't remember any other conditions attached, but they definitely offered 105% LVR for income over 95k without using equity from other properties.

Regards,
Boyler Room

 

[wish-ga]

Hi Crest, glad ANZ was able to help on the commercial loan for you.

It is getting more and more complex the more I try and find a lender to do what the tax accountant has recommended. I feel like I have been sent on a wild goose chase. The banks will do what he is asking but not for someone who is buying a 1st property to live in (me!).

Products to lend IO are for investment loans which takes me out of the race for FHOG and SD exemption.

If I take the Interest Only loan for owner occupier the interest rates are much higher.

I will have to bite the bullet but I feel like it is sprialling out of control when it had seemed to make sense and be straight forward when it was explained to me initially.

 

[Aceyducey]

Wish-ga,

If it seems too complex I suggest you take a step back, focus on savings & stay out of the market for three months.

Then take a another look & see where you stand.

It's important to get into the property market as soon as possible, however not too early for you.

If you're not able to enter the market right now comfortably (particularly considering CG is likely to be low over the next few years) don't!

I also suggest you stop talking to a tax accountant & start talking to one who understands property investing.

Cheers,

Aceyducey

 

[wish-ga]

Acey sorry, my mistake in typing "tax accountant", misleading. Accountant is talking from a tax perspective but he does specialise in property investing recommended by a friend with a property portfolio. He is actually very clever and what he says makes sense. But what he is recommending may be for the people he sees with a bit more dosh (leverage, income, assets, property).

Each person has a piece of the puzzle and I am trying to put it together as they all specialise in a particular field so are not really aware how their bit may impact on another bit of the puzzle.

I will not give up this time just because it is so confusing. If what I do isn't the most ideal I will have to live with it. Doing something is better than doing nothing even if the interest rates are a bit higher or whatever the compromise happens to be.

 

[wish-ga]

I think sim is right. Trying to get too fancy can be one's undoing. I think 100% is too ambitious for someone getting 1st property. I will look for the best loan on 95% and then concentrate on the next one. What do you think?

 

[Sim]

Why not just buy a property, wish-ga ?

 

[wish-ga]

Yes!!!! That is what I will do. Why didn't I think of that?

 

[Sim]

Great idea wish-ga - go for it !!

 

[wish-ga]

I have been looking for an apt since 24 May when I got my loan pre approved. So the property search continues. (but as a nice sideline I am looking for a portfolio appropriate loan)

I am on my way but it seems like I am starting again because I have to organinse new finance is all.

It will be worth it in the long run I am sure...but it isn't very fun at the minute.