Raising deposit solutions

Hi, I am in a situation where I need to raise an extra $30k for buying a piece of land.

My wife is running a dog walking service and also boarding and home dog sitting etc. We are pushing to buy a piece of land in the designated kennel zone to establish kennels to conitnue to grow the business. Because of the zoning of the land all lenders are demanding 10% plus stamp duty beofe they will lend and this puts me at needing $46k. We currently have $16k and are saving $3.5k per month.

I have another property which is on a great interest rate and I can remortgage that to release the equity but I will lose the rate and pay almost three times as much in interest alone.

I have spoken to several brokers and the latest one is suggesting that I apply for a loan to cover the required $30k. My understanding of this is that I will not be able to obtain a mortgage if I were to obtain a loan because lenders would not like to see raising the deposit this way.

The cash that we already have is in genuine savings so the banks are happy with that so I am told.

Just looking for any different angles on solving this one a better way and would appreciate any suggestions.

We considered vendor finance and have been warned off of doing that although I do believe it is an option if we want to take it.

Best answer gets a smiley face.. :)
 
I have another property which is on a great interest rate and I can remortgage that to release the equity but I will lose the rate and pay almost three times as much in interest alone.

Hi Paterson

As above -can you please elaborate on this further so we can dig deeper.

What's the property worth, how much is the loan, which lender and why three times more interest?

Cheers

Jamie
 
Hiya

Looks like we posted at the same time - and you answered my question.

They way I see it is you have two options.

Cop the higher rate and move to a conventional lender that will release equity or save more money (which you can do reasonably quickly).

Usually it's fine to use equity to fund the deposit on another purchase - so I can't see why there's an issue here....but admittedly I don't know the full picture.

Cheers

Jamie
 
I have spoken to several brokers and the latest one is suggesting that I apply for a loan to cover the required $30k. My understanding of this is that I will not be able to obtain a mortgage if I were to obtain a loan because lenders would not like to see raising the deposit this way.

There are some lenders out there that will accept non-genuine savings as a deposit.

Like others have said more numbers would be good ie what's your employment and income, is your wife PAYG or is the dog walking her only income? Any other income or debts?
 
I earn $165k odd per year. My wife cant substantiate any earning as its her only income and did not hit enough to pay tax to prove an income so its just me. No debt whatsoever apart from the mortgage.

I can use the equity, no issues but I do not want to lose that great rate so I would rather solve the extra funding another way if possible. I am also yet to do my tax return so that could assist me in extra funds, who knows.
 
Who have you got the ~1.5% interest rate with?

So as I see it, your options are (in no particular order or recommendation as they all have their drawbacks which could impede borrowings):
- Vendor finance
- Personal loan to fund the deposit
- Draw on equity on existing property
- Sell existing property
- Cash advance on a credit card/s
- Credit card balance transfer magic
- Keep saving
- Cross collateralise :eek:

There could be more but that's all that spring to mind at the moment.
 
Can you secure the land now, sign contract... Negotiate $15k deposit along with a longer settlement allowing you time to save the remaining deposit required for the bank. Can usually get around only needing the funds closer to settlement. Should give you/partner some time to be fully ready to expand the business as well.
 
I have already told the seller I will need two months to find finance and there is also and expected 28 days to close on top of that as standard so that gives me the ability to raise $10k thereabouts through saving which leaves me just $20k short. There must be a way to find that. Is it uncommon for the seller to lend the remaining deposit? It sounds dicey.

I am about to email my employer to see if they buy annual leave back. My car is not worth enough to raise anything like that amount.
 
just get your wife to draw it on a credit card and loan it to you, it's tax deductible. can always do a balance transfer if it bugs you too much

why did someone warn you off vendor finance?
 
Hmm with the info available, i'd second your brokers recommendation of getting a personal loan to source the deposit.

If you refinance your current amazing rate, your paying 3.5% more on your 185k of existing debt. That's $6k+ per year, every year you have the mortgage. Play this out 30 years and your talking hundreds of thousands!

If you get a personal loan of 30k at 15% more than home loan rates (so 20%), you'll pay an extra 4.5k per year in interest until you pay it down. With your savings rate, that's like 12 months max.

So comparing the two options, it doesn't make any sense to refinance out. Also it must be great to have debt @ that price! I assume you already know that though. ;)

So now to the next qn of whether banks will lend to you using borrowed funds as a deposit. Should be possible so long as you meet the genuine savings requirements (you already have equity so it needn't be a problem either) and can service both the personal loan and the mortgage.

On a 165k income, i'm pretty sure its a non issue. E.g. current client of mine has $40k of CC debt and got approved for a much bigger loan on a significantly lower income.

Crossing COULD be an option here too. Normally most brokers are completely against it, but it could serve a legitimate purpose here. Not sure i'd go with it, but worth consideration.

Cheers,
Redom
 
some lenders specifically exclude borrowed funds as part of the deposit. many others do not. Id investigate the optionyour broker gave you more fully (which lender for the h/l, which for the p/l etc), because from what has been said, its a viable option.

""The cash that we already have is in genuine savings so the banks are happy with that so I am told""
 
Hi Pat, is there a reason why the existing $185K loan can't be increased.

Is the $185K a Navy Loan? I believe their may be a lender out there who is prepared to take a second mortgage behind your low rate loan to raise the $30K you need.
 
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