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Affordable Homes SA

Discussion in 'Property Finance' started by joel, 23rd Jun, 2015.

  1. joel

    joel Well-Known Member

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    Thanks in advance to everyone who has helped me thus far. The Affordable Homes program in SA looks like a good way to buy.

    For those who have more knowledge on the topic, if I buy a house through the AH program, will the bank ever value the place higher than the price I pay? I was just thinking maybe I'd have a larger deposit /lower LVR than expected.

    For example, if I agree on a price of 250k for place worth 282k, with a 25k deposit (originally 10%), then is the LVR 225/282 = 80% and suddenly I don't have to pay LMI? Is this plausible?

    Thanks!
     
  2. joel

    joel Well-Known Member

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    Anyone?
     
  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    No. They'd use the agreed price as the value, and LVR would be based off that.
    So in your example, you'd still want to find 10% of 250K.
     
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  4. joel

    joel Well-Known Member

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    Damn. Thanks.
     
  5. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Lower of the purchase price or the valued figured is used - so doesn't work that way unfortunately. Post settlement you can get a new valuation completed (wait 3-6 months for the valuer to disregard the previous sale price) and then if there's an equity gain any accessible funds can be released then.
     
  6. joel

    joel Well-Known Member

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    That's good news if I want to refinance then. Maybe it's worth keeping an eye out for any discounted LMI deals (if they can still do those like INGs $1 LMI last yr), live in/Reno/pay P&I until <80% LVR, and then move out, rent it out, and switch to an IO offset package?
     
  7. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    There's no need to change lenders, you just need to have the loan structured correctly with an investment friendly lender and you're set.

    That ING promotion was a once off which died out quickly for good reason - wouldn't rely on it. ;)

    At this time you can still topup to 90%, so you can purchase at 90% LVR, live in and waiting for equity increase/reno and draw out any funds up to 90% of the new valuation, only paying the difference in LMI (at this level will be a couple hundred dollars).
     
  8. joel

    joel Well-Known Member

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    Ah ok sweet. Being a casual will limit my options for that though.

    If you take out a seperate equity release loan from "House 1" as a deposit for a "House 2" PPOR, then switch House 2 to an IP later, the equity loan becomes deductible doesn't it? Basically I'd be looking at doing the buy/live/reno/rent out strategy.
     
  9. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Casual won't be an issue with the right lenders - this is where a good broker comes in.

    You've got it down pat there - deductibility is determined by the usage of the funds - so if House 2 becomes an investment the equity loan becomes deductible.
     
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  10. D.T.

    D.T. Adelaide Property Manager Business Member

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    Corey is quite the investment - savvy mortgage broker, he hooked me up with all of mine. You'd do well to discuss how to do that with him once you have your deposit together. I'm positive what you've described would work well for you, ie buy a cheap place (preferably run down for bonus effect) on AH program, tap the equity out, buy rental properties and/or upgrade PPOR, rinse repeat, rinse repeat.
     
  11. Coota9

    Coota9 Well-Known Member Premium Member

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    Newdart,

    I can say I have not yet used Corey for any IP deals I have done but he has given me some invaluable unbiased advise when I have asked his opion before,no hard sell,no obligation..

    Ultimately you need to make up your own mind on what broker,accountant etc you use but the question I would ask any broker you are thinking on using is -How much repeat business do you get? Which I know for a fact Corey has plenty..
     
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  12. joel

    joel Well-Known Member

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    Sounds good. Now I just need to save up, and find the right place!