Tricky one for the brokers

Hi Guys
Would love some advice on our situation.
The crux of it is we want to buy a new PPOR before selling our existing. Existing will be on the market in a week, but we want to make a pre auction offer on the new place now or buy at auction in 3 weeks.

Current PPOR worth $1.2m Loan $590K ANZ
Current IP worth $470K Loan $450K ANZ
No other debt, 3 kids.
Incomes $280K

The new place would cost $1.55m and we estimate we would end up with a loan of $1.02m for the new place (inc purchase costs).

We could do it with bridging finance if we had a sale contract on the existing PPOR, but is there anyway we can achieve it before we have a sale contract?

If it is relevant to the answer, the rental on the new place would be $1100pw. I guess this may be relevant if we have to make the new place stack up on its own, even though we don't intend renting it out.

Would love some advice.

Cheers

Justin
 
Bridging finance is a horrible beast. Very, very messy and even the lenders that say to do it, don't do it very well. It's also expensive as many lenders charge premium rates whilst the bridging is in place.

Depending on your income, it may be possible to make the argument that in the worst case scenario you'd keep the property as an investment. This way you don't need to show a sale contract and it's quite easy to structure the loans to be flexibly enough to make a smooth transition from one property to the other when your first PPOR is sold.

In this scenario most people and lenders tend to think 'bridging finance'. In practice there's usually easier, quicker and cheaper ways to get the job done.

Looking at the figures you've posted, off hand I'd say this is a piece of cake.
 
Thanks Peter.
We can get a long settlement (4+ months) so I guess we can take a leap of faith that our place will sell quickly and avoid the bridge...

Current place is 3br in Port Melb so should sell easily enough if we are reasonable on price.

I guess we just have to make the offer on the new place not conditional on finance approval, as we are unlikely to get it without a sale contract.

Our incomes are $280K but to make the new place stack up as a stand alone investment would be tight.. and we would be close to getting into LMI as well..

Cheers

Justin
 
You're possibly limited given that you appear to have cross collateralised your IP with your PPOR. You're also with the ANZ who is not the most generous lender in these circumstances. The cross collateralisation also commits you to the ANZ unless you're willing to restructure some things.

Despite this, the LVR still appears to be below 70%. if you've got enough equity for bridging finance, you've got more than enough for what what I'm suggesting.

The affordability may be tight for you personally, but it only gets worse with bridging finance. They simply hide this by capitalising the interest whilst you're holding both properties. You can achieve the same result by having a cash buffer in place, which can be financed if necessary.

At the end of the day, it is a bit of a moot point. You don't even know if you'll need all this until you've purchase and have put your existing house on the market. I'm happy to run some 'worse case' scenario figures for you, but I don't think there's a significant problem here.
 
Bridging finance is a horrible beast. Very, very messy and even the lenders that say to do it, don't do it very well. It's also expensive as many lenders charge premium rates whilst the bridging is in place.

Bridging straight forward with CBA and far from horrible, no premium rate charged.

Depending on your income, it may be possible to make the argument that in the worst case scenario you'd keep the property as an investment. This way you don't need to show a sale contract and it's quite easy to structure the loans to be flexibly enough to make a smooth transition from one property to the other when your first PPOR is sold.

In this scenario most people and lenders tend to think 'bridging finance'. In practice there's usually easier, quicker and cheaper ways to get the job done.


This is the first avenue, most deals don't need to be bridge as can show worst case. The is best way to set up for the client, it give the control of the sale to the client rather then the bank. It's rare that those that qualify for bridging aren't able to set up in this structure.
 
Hi Justin

Wouldn't hurt to pick up the phone and give Pete a call - he's down your way and knows a thing or two about tricky finance structures.

Cheers

Jamie
 
Hi Peter,
Yes the IP is crossed.
Thanks for the offer.. talking to the agent Thu night, so will see how we go.
 
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