Need a few mil temporarily to swap PPOR

Discussion in 'Loans & Mortgage Brokers' started by scientist, 12th May, 2021.

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  1. scientist

    scientist Well-Known Member

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    So I want to swap PPOR. I do not want to sell before buying, because I'm very particular about what I want, so the right property might come up once or twice a year. I can't risk selling, especially in this market, and lose the exposure to the local area for up to a year. Therefore I now face a financing problem where I need around 3 million to buy the next one, then as soon as it's secured I will start the process of selling the current PPOR, which would involve a cosmetic reno followed by a standard auction campaign.

    I have hit my serviceability cap long ago. What are my options here?

    I've thought of the following and would really appreciate any feedback or new idea suggestions:
    1. negotiate a long settlement with vendor, or reasonable interest rate for late settlement - but the properties I want would all be selling at auction, is this a realistic proposition?
    2. somehow find new finance, despite my serviceability cap. I have lots of equity in my property and share portfolio, just no serviceability! and I'd only need this finance for up to 6 months while I wait to sell the current PPOR
    3. some rich guy here can come to my rescue and lend me a few mil (i'll provide you a mortgage over the new property and pay interest of course)
    4. ???
    Thank you!
     
  2. Terry_w

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

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    bridging loan>
     
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  3. wylie

    wylie Moderator Staff Member

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    Why not do your renovation on the current PPOR now, so that you can move quickly once you find the place you wish to buy?

    That way asking the vendor for a long settlement on a new place is less risky.

    And of course, look at bridging finance.
     
  4. scientist

    scientist Well-Known Member

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    Thanks for suggesting bridging loans - how do they work? Do they require I have the serviceability because if they do then I cannot.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Bridging loans generally require you to service the end debt (after you've sold your existing property). Often the main criteria is limited by equity.

    Sounds like you wouldn't have any debt after it's all done and you've got plenty of equity. Overall sounds fairly straight forward. Talk to your existing bank or broker.
     
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  6. scientist

    scientist Well-Known Member

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    Thanks. What if I don't even have the serviceability to qualify for my current level of debt? because that's the likely case haha...
     
  7. Terry_w

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

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    Is the one you are wanting to sell unencumbered?
     
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  8. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Would really need to understand the whole picture to be able to give any useful commentary, but if your existing house is unencumbered it's likely not an issue.

    There's also private lenders that may be able to do this, but they'd charge a horendous amount.
     
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  9. scientist

    scientist Well-Known Member

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    I can arrange for the current PPOR to be unencumbered, all but one of my properties are with Westpac so a security swap shouldn't be difficult.

    What significance does unencumbrance have?
     
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Briding is easier as a first mortgage.
     
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  11. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    Westpac will capitalise the interest on a bridging loan up to 70% (starting LVR). You do have to qualify for the "end loan" but if this is the same or les than current loan I wonder if you could work out a way to move forward there.
     
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  12. Terry_w

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

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    Westpac and st g have one of the best bridging loans out there!
     
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  13. Redom

    Redom Mortgage Broker Business Plus Member

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  14. scientist

    scientist Well-Known Member

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    Thanks redom. So say I have no banking currently with st george and I also make my ppor unencumbered. If I intend on fully repaying the bridge loan, will serviceability be an issue? If so, how?

    Thank you
     
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  15. Terry_w

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

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    can still be done potentially if the end debt will be nil
     
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  16. scientist

    scientist Well-Known Member

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    So i called St George about bridging loans (they call it a relocation loan) and it seems I still need to meet serviceability for the bridging loan itself, which makes no sense because if I can meet serviceability then why wouldn't I just get a normal home loan and pay 2.xx% instead of 5.xx%?

    I'm still looking for a bridge loan that doesn't look at your serviceability, would love suggestions. Or if I'm talking to the wrong St George banker please let me know the right channels.
     
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  17. Lacrim

    Lacrim Well-Known Member

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    Just go to a broker. No skin off your back.
     
    Last edited: 13th May, 2021
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  18. scientist

    scientist Well-Known Member

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    I spoke to a few and the gist of it is they don't like doing these because there's no end loan and they don't get paid by the bank.

    I'm happy to pay them directly, if anyone's confident they can help me with my situation please PM me and we can discuss fees and details.
     
  19. Terry_w

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

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    I would ring St G back and speak in a different voice to before. Try this 3 times and see if you get a different answer.
     
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  20. MTR

    MTR Well-Known Member

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    Lol. Very funny