Home Purchase Dilemma!

Discussion in 'The Buying & Selling Process' started by Ron, 24th Dec, 2019.

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  1. Ron

    Ron Well-Known Member

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    Hi Guys,

    I have bought a property at auction in Liverpool NSW 800K incl stamp duty. Have paid the 5% deposit and had got a credit assessed pre approval from ING for a 250k full offest loan. I am putting down a 600k deposit. 50k is my buffer. The house has tenants paying $600/wk but I will move in and share the space at reduced rent till renos.

    A week before purchase I lost my job, this is normal in our crappy industry (I work as an architect), we normally get another job within a month on average. Now the bank wants updated payslips not more than 30 days old and I cannot provide this as I lost my job. Settlement is end of Jan 2020 and I need a loan. How do I get one and what type of loan, its so hard to get a home loan, the bank is just ridiculous asking for new items daily and dragging on . I have zero credit, a 75% deposit, job usually pays over 100k yet cant get one!!

    My sister says worst case she will help out by loaning me 250k so I can buy off house for cash. I need to take a loan to pay her off after settlement and I will pay loan with bank as normally- by then I should get a job.

    Also we decided to make a formal agreement with lawyer on our personal loan conditions, any recommendations for lawyers still open in Liverpool,western Sydney and what type of document and cost would that be?

    Please advise, getting desparate.

    Many thanks and merry Christmas!
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Not good... :(

    If ING already knows (or will know) that you're not employed, they're not going to fund the loan. Other lenders won't approve a loan because they'll want current payslips.

    Even if you do get a new job, ING might be a problem as they're fairly conservative an have minimum employment periods. They might make an exception.

    Realistically ING wasn't a good choice for your circumstances. A classic example of 'cheap rate' is not 'most suitable'. There's plenty of lenders with whom this wouldn't have been a problem.

    There are lenders that would do a non regulated loan if you met certain criteria. DON'T GO THERE. These loans are very expensive and could bankrupt you if something goes wrong (like a single late payment).

    Best option is to take up your sister's offer, get a new job asap, then refinance your sister out after a few weeks in the new job with a more suitable lender.
     
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  3. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Re conveyancer - try All Aspects Conveyancing in Lindfield. Nicole is the conveyancer and works crazy hours.

    Re the loan - you need a job otherwise you won't be able to get a loan. If you can at least get a new job and employment contract then lenders like NAB and CBA are excellent in this space. Other lenders can work off an employment contract rather than payslip particularly due to the low LVR however this is by exception depending on the overall strength of the application. Best to use lenders that are designed to handle this scenario without needing an exception.
     
  4. Ron

    Ron Well-Known Member

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    Thanks for the response guys, other than NAB and CBA which other lenders should I consider (I dont really like the big Four), and what type of loan product - I want a 100% offest account with unlimited top ups. This would be after I take up my sisters offer of a loan, get a job and refinance to pay her back.

    Re - on this refinance - would this be an equity loan, or what since I'd have the property fully paid off and how hard is it to get this loan?

    Also what type of document do I need to sign with my sister regarding her loan to me?

    Re -Shahin, I was looking for a lawyer who can do this doc based around Liverpool NSW, but you mentioned a conveyancer in Lindfield. I have my conveyancer but shes not back till Jan 13.
     
  5. Trainee

    Trainee Well-Known Member

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    Whats unlimited top ups?

    do you really have to like your lender?
     
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  6. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I also don't know what you mean by 'unlimited topups'. These days every lender will require a full application for any additional increases.
     
  7. Ron

    Ron Well-Known Member

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    Meaning topping up/paying down my mortgage with extra repayments without being penalised.
     
  8. Trainee

    Trainee Well-Known Member

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    You want both an offset and unlimited repayments and redraw because......

    The 25% lvr loan suggests you are not thinking long term.
     
    Last edited: 26th Dec, 2019
  9. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    That would be any variable rate loan. I can't think of a variable loan that doesn't allow extra repayments without penalty these days.



    @Ron there might be some merit to this comment. A deeper dive into your longer term goals should be performed to determine if the amount you're borrowing is ideal for your longer term goals.
     
  10. The Y-man

    The Y-man Moderator Staff Member

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    Could achieve the same impact with an offset account (if I understand your meaning of "topup" is paying down the mortgage. In the banking industry, "top up" means BORROWING more ~ to increase your loan)

    The Y-man
     
  11. Trainee

    Trainee Well-Known Member

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    And if you are thinking I just want to pay off the mortgage as quickly as I can because I hate debt and banks, and I'm never going to move out of this house...... have another think about it.
     
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  12. kierank

    kierank Well-Known Member

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    Totally agree.

    A few of my favourite investment quotes come to mind here:
    1. Good debt is GOOD
    2. Bad debt is BAD
    3. Never say NEVER
     
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  13. Trainee

    Trainee Well-Known Member

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    Look at two scenarios.

    1 800k ppor, zero debt
    2 800k ppor, 640k debt (used to purchase ppor), 640k in offset

    If you ever move ppor (job change, relationship change) and keep it as ip, 2 is better because the interest is probably deductible.

    If you ever lose your job and need money 2 is more flexible (can’t borrow with no income).

    however if you can’t control spending having money available in offset is a bad idea.
     
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  14. Ron

    Ron Well-Known Member

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    Don't a lot of people here pay off the ppor and take out interest only loans on investment properties only? While it may or may not be the best strategy paying off the ppor is kind of like a security/peace of mind thing for noobs like me.

    With this property I will not only live in it but convert it to two other separate units/ flats as well for cashflow so its not too bad.
     
  15. Trainee

    Trainee Well-Known Member

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    If you ever want to move PPOR, the outcome is different.
    That security is an illusion since the PPOR is up for grabs anyway if you don't pay IP loans in your name.
     
  16. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I would suggest you don't use a conveyancer - they can't give the legal advice you need.

    You and your sister will need to enter a loan agreement and she should consider a registered mortgage over your purchase. Only lawyers can draw up loan agreements so you might as well use one for the conveyancing too.
     
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  17. pinot

    pinot Active Member

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    It seems like OP is in a high equity, low serviceability scenario. What would you suggest in a situation like this as I am in something similar?

    Having said that, I have no plans on moving out of PPOR for at least 10 years and would look to Refi down the track.
     
  18. Trainee

    Trainee Well-Known Member

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    If serviceability works, there is very little cost to 80% lvr with offset. Above 80 lvr etc come into play.

    why limit options when you dont have to and it doesnt cost you anything? You move out because of job or family changes. Or you need to buy a car. Or whatever.

    Refi doesnt help in that its how you use the proceeds of the loan that matters.

    the only time 80 lvr with offset is bad is if you cant control your spending.

    Say after 10 years you have 50% of the loan in the offset v 50% of the loan paid off. Thats a big difference if you move PPOR. The difference gets bigger over time.
     
    Last edited: 4th Jan, 2020
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  19. pinot

    pinot Active Member

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    I agree and thanks for the clarification. All on the presumption that serviceability isn't an issue. I suppose we don't know the OPs situation but yes, 80% lvr allows for flexibility with strategies for sure.
     
  20. kierank

    kierank Well-Known Member

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    Nor does any us know our future.

    I would go with flexibility any day of the week, even if it is slightly more expensive.

    None of us know when the **** is going to hit the fan.

    When it does, flexibility is a god-send ;).
     
    Last edited by a moderator: 4th Jan, 2020
    Lauren350 and Peter_Tersteeg like this.

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