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Lenders for Docklands apartment <50sqm

Discussion in 'Property Finance' started by Hockey Monkey, 19th Mar, 2016.

  1. Hockey Monkey

    Hockey Monkey Active Member

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    i have a colleague that purchased an apartment off the plan about 2 years ago and is now having trouble finding a lender. I understand Docklands (in Melbourne) is blacklisted my many lenders. He is worried he is going to lose his deposit.

    Any suggestions?
     
  2. Coota9

    Coota9 Well-Known Member Premium Member

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    @Hockey Monkey

    I am sure others will ask for more details vvv

    Purchase Price
    LVR %
    Investment or PPOR
    Deposit amount etc
     
  3. Hockey Monkey

    Hockey Monkey Active Member

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    I understand it is about 400K with a 10% deposit for an investment. I can find out more details but let's assume for now the LVR will be 80%.
     
  4. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    LMI or no LMI? Is he being rejected on servicing or purely on the apartment? Is the living area, ie excluding car park and balcony >40sqm? Is the OTP price more than the current market value?
     
  5. Hockey Monkey

    Hockey Monkey Active Member

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    I had just assumed it was a postcode issue but obviously I need more information. I'll ask him and come back
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    It shouldn't be too difficult at 80% LVR to find a lender, but it does depend on exactly how large the appartment is. At 90% there's only a handful of lenders willing to go there but it's still possible.

    Some lenders have black lists on specific appartment buildings, so the actual address would need to be known to comment on that.

    Keep in mind that lenders serviceability criteria have changed significantly. I've already had some issues where people purchased a year or two ago off the plan but no longer qualify for the loan on the basis of adjusted affordability.

    Another concern will be if the valuation will hold up. This could very quickly turn an 80% lend into a 100% lend if the value is worth 20% less than the purchase price.
     
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  7. TaylorChang

    TaylorChang Well-Known Member

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    If the servicing is strong enough, CBA will take it. CBA didn't have postcode restriction and size can down to 40 sqm for Dockland property.

    I am doing one at moment with CBA. But the size is bigger than 50 sqm.
     
  8. Hockey Monkey

    Hockey Monkey Active Member

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    Got some more details.

    $400K purchase price
    10% deposit

    Intends to borrow 80% against the apartment with the remainder from equity in his PPOR (keeping them uncrossed)

    Wife's income is via a company they run that has 3+ years of financials. Serviceability is ok.

    They are currently in the process of refinancing to ANZ with their current PPOR loan and will extract equity at the time so it is available for this apartment transaction.

    So in the end at a 80% LVR, it sounds like they should be ok. Thanks for the tip on CBA.
     
  9. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Do they have enough excess equity to cover a shortfall between purchase price and bank valuation? There's a pretty reasonable chance the val will fall short.
     
  10. albanga

    albanga Well-Known Member

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    Docklands, OTP! I would say that is probably the worst investment to make in buying real estate in all of Australia.

    Apologies as I know that does not seem productive to this topic but in essence it is. Your friends options are lose the deposit now OR finance it and lose the deposit plus all holding costs and headaches when they eventually sell in 10 years time for less as honestly an OTP under 50sq in Docklands is a disaster. I'd be happy to walk away with only dropping 40k.
     
    Last edited: 20th Mar, 2016
  11. Coota9

    Coota9 Well-Known Member Premium Member

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    Agree still a world of pain if he does settle..rental estimate would be interesting
     
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  12. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    CBA is an option, not personally my first choice for >40sqm. Is he looking to get a lower rate? If so might want to think about putting the refinance on hold with ANZ and actually talk to a broker.
     
  13. Player

    Player Well-Known Member

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    I'm with albanga and coota. Arrest the bleeding now whilst the cut is small. Better chance of wound healing without infection.
     
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  14. Hockey Monkey

    Hockey Monkey Active Member

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    Thanks I tend to agree and will pass on the message.

    FWIW, the development is Home.

    Lots of glossy marketing with likely inflated prices to cover the 2 years rent guaranteed at $1400pcm
     
  15. Jason Tyrrell

    Jason Tyrrell Well-Known Member

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    By under 50sqm, is it actually over 40sqm? If it is 80% LVR then it shouldn't be a problem with some lenders. But, as suggested, that could be at risk if val comes back less than anticipated.
     
  16. TaylorChang

    TaylorChang Well-Known Member

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    Normally, ANZ's rate will not be as sharp as CBA.

    CBA can do below 40sqm case by case I know someone did 38 sqm with CBA. so 40sqm shouldn't be a problem.
     
  17. The Y-man

    The Y-man Moderator Staff Member

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    IF they let you out of a binding contract in a slowing market.

    The Y-man
     
  18. JDP1

    JDP1 Well-Known Member

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    Id say southbank otp <50sqm is worse.
     
  19. albanga

    albanga Well-Known Member

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    I think they would as the developer will pocket the 40k and just get there sales people to doop another poor sod with some fancy marketing and how they are selling it cheaper as the previous buyer pulled out due to lack of finance and they are now selling under market and its an absolute steal, once of a lifetime opportunity.

    Both have 0 upside but I would argue Southbank will see more growth than Docklands over the next 10 years. Noting when I say growth I mean at about 1/3 that of inflation. Anyone holding an investment in any of these places should try and sell ASAP.
     
  20. Jason Tyrrell

    Jason Tyrrell Well-Known Member

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    Yep if less than 80% CBA have been known to do around 30 sqm, if the deal is solid otherwise.