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From: KJL .
Opinions required please.
I signed a contract for an OTP unit some 15 months ago, which is now nearing completion.
I put in a 5% deposit, with the balance on settlement - which I'm funding by way of a loan.
The reason I bought the OTP was (a) to get capital growth without having to draw down anything for 15 months (a risk, I know); and (b) because research suggested it was a 'wholesale' deal so even if capital growth was negligible there was still some value in it at purchase.
At the time of exchange I had a loan already sorted out with a lender which required / will require me to put in some more cash - nothing which committed me, but was by way of a certificate issued by the Bank saying they'd lend me the money if my financial situation didn't worsen materially or something along those lines.
However, my mortgage broker (who I only came across since the OTP purchase, and who I've used only once when I bought my own home) says that he can arrange for the loan to be made against the current value of the IP, as opposed to the contract price. i.e. the IP was 200k purchase price, but if (for example) it's now valued at 250k then he says he can get me a loan of, say, 80%, which means I put no more cash in - and handily pay no mortgage insurance either - which would be a great result.
Is he right - can that be done? I would have thought a lender would only lend against the contract / purchase price, as opposed to the valuation - although I admit I can't give you any good reason why. Or, am I going to have a nasty surprise after reading your responses and have to tip in more cash...?
Kev.
Opinions required please.
I signed a contract for an OTP unit some 15 months ago, which is now nearing completion.
I put in a 5% deposit, with the balance on settlement - which I'm funding by way of a loan.
The reason I bought the OTP was (a) to get capital growth without having to draw down anything for 15 months (a risk, I know); and (b) because research suggested it was a 'wholesale' deal so even if capital growth was negligible there was still some value in it at purchase.
At the time of exchange I had a loan already sorted out with a lender which required / will require me to put in some more cash - nothing which committed me, but was by way of a certificate issued by the Bank saying they'd lend me the money if my financial situation didn't worsen materially or something along those lines.
However, my mortgage broker (who I only came across since the OTP purchase, and who I've used only once when I bought my own home) says that he can arrange for the loan to be made against the current value of the IP, as opposed to the contract price. i.e. the IP was 200k purchase price, but if (for example) it's now valued at 250k then he says he can get me a loan of, say, 80%, which means I put no more cash in - and handily pay no mortgage insurance either - which would be a great result.
Is he right - can that be done? I would have thought a lender would only lend against the contract / purchase price, as opposed to the valuation - although I admit I can't give you any good reason why. Or, am I going to have a nasty surprise after reading your responses and have to tip in more cash...?
Kev.
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