How does one strategically formulate the loan amount when purchasing subject to finance?

Hi again all. As some will now know we submitted a (fair) offer today which I hope is accepted but there is every chance it will be countered. I am in Melbourne after all.

When chatting with our broker I expressed my concerns about the recent developments in the lending sphere for investors. We only wanted to commit a certain amount of cash to this property and as it has recently moved a bit (not St. Albans lol) we were worried about bank vals not reflecting recent sales which hadn't settled yet. it was decided that we try to lend a bit more and leave some room in our kitty in case the valuation comes under and then affected lmi, servicing etc.

We obviously had to make up the difference in negotiations with the agent and hopefully our offer is accepted.

However on speaking to our conveyancer about contracting to ensure we have options if the bank val comes under, she advised that the way to protect yourself is by putting down the loan amount you really want to take in the contract. Not necessarily what you intend to get.

It got me thinking that putting a higher loan amount in the contract would also make it appear to the agent/vendor that we have less room to budge financially when they are formulating a counter offer.

Do you guys thinks there is something to this strategy?

Obviously in a hot market it will just get passed over but in a situation where the market is a bit more balanced it may be something to think about.

 

I think it would depend on the individual agents as to whether they perceive it that way or not.
Many investors tend to borrow as much as they can.

Personally, I'd be more concerned if someone came in with a similar, but unconditional offer. They are the ones agents will favour...even if the offer is slightly less.

 

Agree 100%, especially in a strong market favouring vendors.

 

If you are borrowing 90-100%+ it might not be adventagoues to put your loan amount as it could be perceived as a weaker offer.

If you are at 80% an agent knows it really comes back on the bank val matching the contract price so wouldn't have much more of an issue.