Hi all, Just arrived. Looking for advice on a delayed settlement with request to rent during this time after paying a %40 down payment. We’re the buyers! where should I post about this?
So you are buying a house/apartment and the vendor's have requested to rent after settlement ? Or are they wanting to delay settlement with a compensation payment (like rent)? Have they given a reason ? (building their new home delayed or delayed settlement of their new purchase?). Have they indicated how long they wish to delay ? Don't refer to it as "rent", you are best to delay settlement and be compensated than settling and having a tenant, not just financially (from a tax perspective)
No, in fact we are the ones planning to request to rent during a delayed settlement, but we would like to offer an approx.%40 down payment to secure the property and offer some confidence. A breakdown of our situation as follows: * we had previously had a conversation with an Aussie Homeloans broker who told us we could borrow in the environs of $700k * after signing the apartment contract of sale we met the broker and he said that based on our combined actual income and the fact that it was a mix of p/t and casual, that he had been overly optimistic. Based on the revised numbers he recommended a loan from CBA and thought that we could borrow in the $400’s. This would have been enough to purchase the property * last week a bombshell when he told us that there was a change in the Bank's policy which excluded (severely limited?) my partner’s casual income and that they would therefore not be able to make the loan * have since spoken to Macquarie who while initially encouraging have also said they are unable to help * my partner, after having worked full time for a number of years for same company started full time study in Feb 2020, and therefore switched to p/t work. He will qualify in a new profession and he anticipates having full-time employment by the end of 2021 or early in 2022 * once he is working we expect to be able to arrange finance. Our parents are also in a position to assist * we are very keen to buy the property and assume the vendors are equally keen for the sale to be finalised, given lockdown and the uncertain times * we request a long settlement but in the meantime, are able to make an additional payment now of $250k * we also suggest that we move into the property as tenants so that the owners can in the interim receive a rental income * we would mutually agree the rent to be paid until settlement, but the basis would be that since we would have paid 46.25% of the agreed purchase price, the rent we’d pay would be 53.75% of a fair market rent This is what we’re planning to propose to them today. Is this a done thing?
I wouldn’t pay almost half to vendors with no guarantee of settlement. They likely won’t go for it either. And as vendor I’d want full rent. It just sounds really messy. I’d look for another lender, a short term loan for the shortfall, parent loan or parental guarantee or wait to buy when you can do it easily.
Looks like you have a bad broker. Investigate and see a lender like pepper could help. Go to a broker who does a lot with pepper. As I said many times CBA is one of the worst lenders out there. Don't know why people are going to them. Once they get your business good luck negotiating rates etc.
You may need to pay penalty interest rates of perhaps 10% on the value of the house, or full rent if the vendor is obliging. Your deposit should be with your conveyancer. The vendor is out of pocket for the full amount . Your conveyancer should guide you on what you need to do, it should be in your contract. They and the vendors solicitor may help you come to an agreement. The vendor may be entitled to take your deposit wiggle out of the sale and sell the house to some-one else for a higher price.
I'd hope you are dealing with a solicitor and not a conveyancer. And if you can get a loan with a higher rate, then you can look at refinancing once your job is more secure.
You have already entered the contract. Is there a cooling off period? You should seek legal advice asap
The whole process has been handled very badly by all parties. And you signed a contract based on unreliable finance information and now compounding it by putting in more cash (probably messing up deductibility if this ever becomes ip) and opening stamp duty and tax issues (masking part of the purchase price as rent). Get legal advice on your options. the part time, study, etc should have been part of the broker discussions before you ever went to look at a property.
Thanks everyone - we are speaking to a lawyer this afternoon. Will pursue a new broker and work with a solicitor instead of a conveyancer. Really appreciate this advice.
For some one arriving to Australia and with new and casual employment I am surprised this wasnt a roadblock when initiating a loan application / enquiry. Urgent legal advice on broker negligence issues as well as the contract may be wise however there is a real chance the vendor may refuse. They dont have to agree to vary anything. So negotiation will be key once you are armed with complete knowledge. A second opinion from a very competent broker (one from PC is suggested) may assist to address this immediately to ensure all finance avenues are considered. A delay is better than a late settlement which is better than failure to settle. There could even be a path using the parents for a limited guarantee etc.
Here is another example of the limits a conveyancer can be when a legal issue actually arises. Its a reminder that all property conveyance is a legal service and the conveyancer concession is a short cut. Imagine if gyprockers are allowed to also construct homes without a license ?
Hi all, just to let everyone know we've managed to marshal the funs through family and will be able to settle on our intended date. Will seek a bank loan to repay them once our incomes are stronger. Thanks again for all of your good advice.
