So I'm currently purchasing OTP $530k and paid 5% deposit. If say next year the property is completed and the value increases hypothetically $600k, will the bank lend me on the $530k value or the new value $600k? Sorry for the noob question.
OTP increases in value
- Thread starter bonanzawealth
- Start date
Depends on a number of things but some lenders will take the current value and some lenders will take the lower of the valuation or contract of sale.
Even if your lender goes off the lower amount - there is nothing stopping you from settling and then going back to the lender shortly thereafter and doing an equity release on the valuation amount. Bit of a silly policy really.
ANZ and Mac are two lenders I know of that will go off the valuation result if the contract was signed 6 months prior to settlement.
I've had good results with this twice in the last few months - one was an ACT purchase that valued up higher and the other was in Homebush. On both occasions, the valuations came in high enough that clients avoided paying LMI.
Cheers
Jamie
I've had good results with this twice in the last few months - one was an ACT purchase that valued up higher and the other was in Homebush. On both occasions, the valuations came in high enough that clients avoided paying LMI.
Cheers
Jamie
It's not uncommon for lenders to recognise a higher valuation result over a contract of sale if it's been 12-18 months since the purchase. This can be quite handy to take advantage of, you keep your money and potentially avoid LMI in some circumstances.
Be wary with OTP developments. There's plenty of cases where the value dropped between purchase and settlement. In this case you need to front more from your own pocket. We've seen few of these recently in areas we though would have been unlikely.
Be wary with OTP developments. There's plenty of cases where the value dropped between purchase and settlement. In this case you need to front more from your own pocket. We've seen few of these recently in areas we though would have been unlikely.
Nabbroker will also if 12 months have passed since purchase.
You will have to ask or get your broker to as it wont be volunteered info.
You will have to ask or get your broker to as it wont be volunteered info.
Yes. I have done it via Nabbroker (formely Homeside) so dont see why NAB wont do it via branchland if thats where your loan was written?
Thanks, good to know that I don't have to switch Loan when my OTP completed.
Cheers..
NAB and NAB Broker are very different beasts - pros and cons on both sides (mainly cons)......
Great post - my partner Martin and I learnt that our valuation for Hamilton Harbour came in at below contract price (remembering that we had already paid a 5% deposit of $35,000) where we had a couple of weeks to come up with the required gap of $50,000 - be very very careful...theory sounds good but in practice ...I know of two investors who purchased apartments at the higher end where there gaps were four times higher!
You can only ask or go elswhere that will. Simples.
NAB uses QBE as their mortgage insurer (and in doing so their rules) whereas NAB Broker uses Genworth.
QBE has a far superior valuation policy than Genworth. Genworth are more conservative and require full valuations on more scenarios than QBE.
NAB doesn't capitalise LMI - this is a huge one! NAB Broker allows for the capitalisation of LMI. Just imagine fronting up the LMI bill from your own pocket. Its pretty devastating stuff.
Servicing/borrowing capacity calc with NAB is slightly stronger than NAB Broker.
A few more but they relate to more QBE vs Genworth.
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