Lenders for Docklands apartment <50sqm

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?

 

@Hockey Monkey

I am sure others will ask for more details vvv

Purchase Price
LVR %
Investment or PPOR
Deposit amount etc

 

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%.

 

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?

 

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

 

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.

 

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.

 

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.

 

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.

 

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.

 

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

 

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.

 

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

 

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

 

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.

 

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.

 

Id say southbank otp <50sqm is worse.

 

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.

 

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