Tricky finance situation due to dual occupancy - please help!!!!!

[Taila]

Hi there,

I am <1 week away from settlement and in quite a bit of trouble as I stand to lose an $80k deposit.

My issue relates to the fact that I have purchased what I thought was a conservative choice (large terrace divided into 2 unit & we intend to rent out one of them to help with mortgage repayments) however the fact that it is split into two units (& possibly also because it's heritage listed though this has not been sepcifically mentioned) means that both Genworths and QBE have refused to provide LMI to us. Further details are:

- We have an exitsing property with $385,000 owed and bank vals between $520,000 - $540,000
- Purchase price on new property is $795,000 and bank vals between $730,000 (ouch!!!) - $795,000
- We were hopeful of getting it thorugh with CBA at 90% LVR based on their 2 valuations (higher ones) however deal died when the LMI provider said no.

We now cannot go through any lenders who use Genworths or QBE (I know, almost all banks do) so we're trying Liberty because apparently the dual occupancy isn't a problem for them. We are prepared to sell existing property (and expect sale of at least $580,000) but we can't find someone to lend us the money to buy us time to do this.

We have immacluate credit history, double income with no kids, long term with employers and we have met servicability criteria with both Bank West & CBA.

I am hopeful Liberty will come through but with such a big difference in previous valuations and the dramas we've had with this so far I would love to have some other options to investigate/pursue.

I am absolutely frantic about our situation including the fact that we start incurring interest charges with the vendor next week and our risk of losing a $80k deposit.

If anyone has any ideas I would be so grateful.

Marguerite

 

[tobe]

your pretty close having funds to complete with a 90% refi on your PPOR (which frees $100k towards the new purchase) plus your 80k deposit to do an 80% on the new purchase?
I'd contact a couple of brokers on this forum to run some numbers, it may be cheaper to structure it this way, and pay some penalty interest to the vendor than to go ahead with Liberty and tie yourself into a fairly high rate on quite a lot of debt for quite some time (the exit fees to leave liberty early make it unecomonical to do so with the first 5 years or so...).

 

[Taila]

Hi there,

Unfortunately I don't have the $80k to pay towards the new proprty - this was done by a deposit bond. So my best case scenario (based on our most positive vals) is:

Current property: $385,000 owed, $540,000 val (not with current lender) = $101,000 equity to use at 90%.

This still leaves $60k I need to put in to get under 80% on the $795,000 purchase and am going to have real probs getting that together.

I thinK i probably really need a lender who'll either structure this is such a way that they'll finance it until we can sell our current place or who won't have a problem with itbeing "unconventional".

I have the cash for the stamp duty.

Regards,
Marguerite

 

[tobe]

thought that might have been the problem. Bridging finance is dificult at this sort of LVR, its still in LMI territory. Have you explored perhaps a joint venture partner, or unsecured funds, perhaps form a friend or family member?
Is liberty taking security of your existing property? If this is the case, make sure it is structured correctly so when you sell or ferinance the existing property you arent stung with the exit fee on the whole amount.

 

[tobe]

Have you spoken to the relevant authority about changing the dual occ status? This may be a long process, or it may be a simple matter, and you could then re present it to Genworth? Long shot, but worth checking for future reference anyway.

 

[Taila]

Thanks for the advise re Liberty - will def check this.

I am told that the LMI providers are unlikely to reconsider. My solicitor has said that the dual occupancy poses no issues with me living in it as one property however the LMI providers don't like that there are two kitchens, no internal stairs between each level etc. I am also not clear on how much the heritage listing is a problem for them.

I can possibly scrape together $30 - 40k from friends but still leaves me short..will have to keep trying this option if I can't find anything else.

Appreciate your advice so far It is such a horrible situation to be in and we never anticipated that the 2 units would be such a huge problem - we thought it was a really sensible decision because of the (very good) rental income we'd get.

 

[Rolf Latham]

Hiya

Not helpful I know, but CBA do their LMI in house DUA and a dual occ isnt usually a problem. There is likley another issue there.

I reckon NAB would not have much of an issue with this on the surface


ta
rolf

 

[Taila]

CBA had to send the deal to Genworths rather than just approve themselves as it's >$1 million

Re NAB, do they self insure the LMI? And are you suggesting that the Dual Occ & Heritage may not be a prob?

My good val is through Valuecorp so finding a lender who uses them would be ideal.

 

[tobe]

and I guess you have asked your solicitor to look into settlement extensions, how about trying to negotiate with the vendors to carry back some of the purchase price? This may be an even longer shot, but the vendor may be ameniable to this sort of thing with the right interest rate etc....

 

[Rolf Latham]

K

Nab usually sign off in house and dual occs arent an issue even to 95 ( though at lower $ exp)

Are u sure Genworth said no due to the security and not due to some pther reason ?

Dual occs arent a problem, though heritage zoning may be on case by case ?

there isnt a mixed business use in there as well ?

What comparatve sales wouldu have to support a nice high valuation in case you need to procced with a decent lender rather than a "sad" lender with a good val.

ta
rolf

 

[tobe]

tahlia, call Rolf and discuss, structured as two seperate deals, one on the exisiting and one on the purchase leaves the total exposure to each deal under a mil, meaning perhaps avoiding formal LMI, and getting it through their in house LMI... You might be able to go ahead with the refi with CBA and then do the purchase with another lender.

 

[Dazz]

Marguerite,


My comments are prefaced by not exactly knowing what your definition of "helpful" is....but I believe my definition may vary greatly from what you desire.

dual occ isnt usually a problem. There is likely another issue there.

I agree wholeheartedly with Rolf. Rolf is a nice guy, and probably doesn't want to say what that other issue is, so I will ;


Let's pop our mean and nasty Bankers hat on for just a wee minute....

- We have an exitsing property with $385,000 owed and bank vals between $520,000 - $540,000
- Purchase price on new property is $795,000 and bank vals between $730,000 (ouch!!!) - $795,000

If they take the conservative valuations, if they let this through, you would have property worth 520K + 730K = 1.25m.....OK

You will be servicing debt of (385K) + (90% of 795) + (80K deposit bond) = 1.18m....hmmm


1.18m of debt covered by 1.25m of value. Someone's backside is swinging out in the wind ready to be chomped on. It's OK for yours of course to be out there, but the numbers are so close, that the Bank is out there with you. They normally like it when it's just you out there.


I would humbly suggest that this step you have "hoped" to take was too big, at this moment in time, for the tiny amount of equity you have to put into the deal.


Perhaps other braver and cleverer souls here can assist you, but I see a very bleak picture indeed. I'm picturing a top heavy hippo balancing on a bamboo pole. There ain't too much underlying strength there.


Maybe Rolf can pull something out of his top hat and "help" you in this much larger debt arena.

 

[Taila]

Don't worry, I am well aware now that in the current climate my deal is a very dicey one.

My problems are a) my broker nor my current lender flagged it as such & b) I did not anticipate a below purchase price val for the new property & c) the written policies of, say, Genworths don't suggest probs with 2 dwellings on one title or heritage listing - I am aware now, however, that where they are being much stricter about what they insure at the moment, they don't look favourably on anything "non-conventional".

I also wonder if the fact that when Genworths saw that the deal had been looked at with QBE (as they would have done when they credit checked us) made them nervous?

Will make the call as suggested.

 

[marg4000]

Did you have a finance clause?

I can't understand how you are 1 weeks from settlement when finance has not been approved.
Marg

 

[Bigtone]

tahlia, call Rolf and discuss, structured as two seperate deals, one on the exisiting and one on the purchase leaves the total exposure to each deal under a mil, meaning perhaps avoiding formal LMI, and getting it through their in house LMI... You might be able to go ahead with the refi with CBA and then do the purchase with another lender.

Do the purchase with cba, in house DUA and the refinance with anyone else, should be pretty easy, timing the issue,

Dazz CBA are happy for clients to be sitting at well over a million in debt at 95% along as separate security involved so don't think that is the issue, resi lending not like that dodgy commercial lending stuff!

 

[Taila]

Marg - I had preapproval but it was conditional on Val & on securing LMI- did not expect a val below purchase price (& subsequent CBA val wasn't below purchase price). Did not anticipate dual occ probs with LMI.

Bigtone: have investigated this option but a) if I leave existing mortgage & redraw up to 90% with existing lender, val is $20k lower with them so will be a bit short - though this isn't terminal b) CBA have suggested they may not be able to DUA insurance as I am not an existing customer - though they will look into this for me.

Am in discussions with Rolf and also have my original mortgage broker starting process with Liberty but won't progress that until I know it's my last resort

 

[Bigtone]

Bigtone: have investigated this option but a) if I leave existing mortgage & redraw up to 90% with existing lender, val is $20k lower with them so will be a bit short - though this isn't terminal b) CBA have suggested they may not be able to DUA insurance as I am not an existing customer - though they will look into this for me.

CBA can do it, depends if they want to

y not refinance to another lender on current property and use higher val?

 

[luckyone]

What about Westpac as a possibility? I believe they will finance up to 85% without mortgage insurance if you use a mortgage broker (i.e. not directly through them), but you have to pay the normal rate, not the discount rate you get with a professional package. Maybe this is an option if you can come up with the extra 5%? Maybe you can delay paying stamp duty until later. I know in the ACT at least you can pay stamp duty after settlement as long as you pay interest at around 12 or 13%pa on it.

 

[Spectre]

Westpac killed off that 85% a while ago.
As noted the issue is finding a lender who'll fund a higher lvr over 70/80%
Maybe ABL through a mortgage manager.

 

[luckyone]

Westpac killed off that 85% a while ago.
As noted the issue is finding a lender who'll fund a higher lvr over 70/80%
Maybe ABL through a mortgage manager.

Really? I was told only 2 weeks ago that it was still available by my bank manager at Westpac, but that I had to use a mortgage broker.