Land will title in Q4. Borrowing capacity not enough to build anymore. Suggestions?

Discussion in 'Loans & Mortgage Brokers' started by Nir, 2nd Jul, 2019.

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  1. Nir

    Nir Active Member

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    I'm new to buying property and have gotten myself into a a tight situation.

    In early 2017
    I signed a contract for a piece of land in Truganina. Some good residential development in the works there (near Woods Road) with a train station proposed within a walking distance. I figured it'll be a nice area in another 3-4 years (similar to how Laverton/Williams Landing grew). With the intent of building my PPR there. Even with the recent market downturn, the land value has appreciated about $50k (from 345k to about $400k). Construction requires another $250k (builder quote). I was counting on getting the FHB grant and stamp duty concession - I have been told I need to build within 12 months to get that.

    In 2018
    I bought an investment property in Norlane for $390k. To landbank for a few years. While it hasn't appreciated much since then, it is a very good location (walk to station, schools) so I feel it has good potential for the future.
    It's a small house on big block. Cash flow negative.

    Present day
    My developer tells me that my land will title in Q4 2019. So it's a few months away. What my broker said in 2017 about my borrowing capacity is unfortunately very different now :( .
    I spoke to NAB today and was told I am able to service a loan on the land.
    But not the build. So I'm roughly $200k off of what I need to borrow.


    A bit about myself:
    • working full-time
    • I rent
    • no family
    • no kids
    • no HECS, credit cards, finance or any loans

    I am wondering what to do. There's always the hope that bank lending will loosen up over the next few months...but by $200k is a lot to count on.

    Any suggestions? Thanks in advance.
     
  2. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

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    If it works with NAB and you need an additional $200k for the build this sounds fine. Would need to get in now and potentially jig around the existing property. But based on the limited information here it should be fine. My main concern would be around the valuation on the property. What is the proposed LVR?
     
  3. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    You may have options if your loans are structured right - best to do this now so you're ready to go when the time comes. Grab a broker from these forums and they'll be able to sort you out no worries ;)

    It's good that you can borrow for the land, at least you can settle.
     
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  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Unfortunately this problem is a fairly common one with any sort of off the place or extended settlement scenario.

    The NAB is a fairly decent lender, but there are several that have significantly better serviceability models. I think hoping that lenders will loosen their criteria to help this is wishful thinking, but I'm sure that other lenders will be able to help.

    Like the others have said, widen your options and speak with a broker.
     
    Nir likes this.
  5. Nir

    Nir Active Member

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    LVR will be 80%. thank you
     
  6. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

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    You should have a good shot getting the build done assuming NAB has done their assessment correctly. Just need to go with a more generous lender ;)
     
  7. Terry_w

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

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  8. Nir

    Nir Active Member

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    Thank you all for your direction. I am going to pursue some smaller lenders. So far already some positivity from CUA. Some good news this morning with the RBA rate cut. every little bit helps :)
     
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  9. wylie

    wylie Moderator Staff Member

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    Are you going direct to lenders? Isn't that a risk to your credit file? We've always gone to a broker who can look around for us without jeopardising our credit file.
     
  10. Nir

    Nir Active Member

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    I've been told (by lenders) that unless I explicitly consent to an application being lodged, that won't affect the credit score. So far I've only been getting the initial screening from lenders (followed by a resounding "No!" :D ).

    But I am no expert in the subject. Given recent history, I wouldn't put it past banks to lie to my face.

    Brokers - I've gone to one with no luck. But will try again.
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    The floor rate generally wont change with most lenders, so if you are being told it will be lender/broker x.......... id ask for evidence of same

    Its not a matter of lying to you, its a matter of getting the business in the door and making it work, if it turns our afterwards that it was never a go, then all of you have spent too much time, but its YOUR credit file that may be affected


    ta
    rolf
     
  12. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

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    I think all the brokers that have commented on this thread would know exactly how to do this. Would probably save you a lot of time.
     
  13. Nir

    Nir Active Member

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    Noted and looked you all up. Thanks. :) Simon I'll be in touch shortly. You are a short walk away from me (I'm on Bourke St)
     
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  14. tobe

    tobe Well-Known Member

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    Odd the nab guy said land loan yes build no. With the build you get rent and neg gearing increase in the calculator. Odd. Like others have said there’s some non bank lenders who will most likely do the deal. If you’d prefer to pass on the whole thing let me know and I can put you in touch with some builder sales agents who might be able to arrange an on sale or nomination to another purchaser.