Join Australia's most dynamic and respected property investment community

Contract price or valuation?

Discussion in 'Property Finance' started by alvaro86, 26th Aug, 2015.

  1. alvaro86

    alvaro86 Member

    Joined:
    27th Jul, 2015
    Posts:
    11
    Location:
    Sydney, NSW
    Hi All,

    I have a few loans with commonwealth bank and I know that even if you buy land/property off the plan, CBA will always provide you a loan according to the either the contract price or valuation, whichever is lower.

    However, I have now heard from someone that some other banks such as ANZ will provide a loan according to the valuation.

    For example, if valuation comes in for off the plan land at $700,000 but contract price of $500,000 they will provide the loan at 80% of the valuation. Is this true?

    Can some people please shed some light on this?

    I look forward to some replies. Thanks everyone.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    Quite a few will do this if the contract was signed more than 12 months ago.
     
  3. alvaro86

    alvaro86 Member

    Joined:
    27th Jul, 2015
    Posts:
    11
    Location:
    Sydney, NSW
    Thank you for replying.

    So is it true providing the contract was signed 12 months ago or more?

    Thanks.
     
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    Yeah it's true.

    Anz might even be 6 months.

    Macquarie and possibly ING will also consider.
     
  5. alvaro86

    alvaro86 Member

    Joined:
    27th Jul, 2015
    Posts:
    11
    Location:
    Sydney, NSW
    Thank you for replying.

    Never going win CBA again. My property appreciated a lot more since the contract date and they would only provide 80% of the contract price.

    Never again.
     
  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    All banks have their quirks. Don't be surprised if you say the same things about the next lender at some point :)
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,579
    Location:
    Sydney or NSW or Australia
    What if contract value is 30-40% below val? Will it form somewhere in between?
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,033
    Location:
    Sydney
    Generally they won't lend more than 100% of the contract price. Years ago you could even get more, even cash out - the good old days when you could buy a property, have instant equtiy and cash in your pocket.
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,579
    Location:
    Sydney or NSW or Australia

    Yeah, I forgot about a few discussions that I had with a valuer where the previous vals on a devt site were 50% above realistic, bank loaned funds & developer is now 3 times removed from the equation.
     
  10. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,173
    Location:
    Adelaide, SA
    Nothing stopping you getting a reval and equity release directly after settlement.

    All the lenders policies have their place, there is no one perfect lender unfortunately.
     
  11. Mick C

    Mick C Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    206
    Location:
    Sydney
    CBA allows for the increase value as long as the OTP contract is over 12 month + you need to ask before you submit with CBA.

    There's a few that takes the increase value for Off the plan- ANZ, ING etc..