Serviceability Issue Renovating

Discussion in 'Renovation & Home Improvement' started by Goosehead, 6th Mar, 2020.

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  1. Goosehead

    Goosehead Well-Known Member

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    So just got off the phone from the bank and they say I don't have the servicability to refinanace for the renovations. The issue I have is the Banks predicted time for renovation and sale is six months. The interest cost with no income are to big for my budget. My timeline is 4 months and the loan is to cover the costs. Anyone faced this issue and came up with a result? I have tried refinancing but so far unsuccessful.
     
    Goosehead, 6th Mar, 2020
    #1
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    Which bank?
    Other lenders might be more lenient regarding the servicing, I suggesting speaking to a broker if you haven't already.
     
    Lindsay_W, 6th Mar, 2020
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  3. Brady

    Brady Well-Known Member

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    Limited info, but sounds like you're wanting to borrow to renovate house to sell whilst having no income?

    Feel free to add some more detail.

    Who's your existing bank?
    Is it an owner occupied property or investment?
    What's the LVR?
     
    Brady, 6th Mar, 2020
    #3
  4. Goosehead

    Goosehead Well-Known Member

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    Bank is NAB.

    Currently rented, will be vacated for the renovation, hence the 6 month no income period assumed by the bank

    LVR is roughly 40%. IP2 is at 50% LVR and rented. No other loans, credit card, store finance etc. Currently renting with a employer assistance.
     
    Goosehead, 6th Mar, 2020
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  5. Brady

    Brady Well-Known Member

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    Does it service once it's rented out? (mentioning the sale is probably a concern)
    If it does service post rental and the only concern is having enough funds to service whilst no rental income (which is fair enough - responsible lending)
    Could you look at borrowing extra funds to cover any shortfall during that period, with plan not to use but enough if required.
     
    Brady, 6th Mar, 2020
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  6. Goosehead

    Goosehead Well-Known Member

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    Well I have left a considerable buffer, i.e 10% for work over runs. And 10% for costs like the interest with no income. It is a subsidies loan as well so the interest repaents are lower than the bank requires. Not sure how this is meant to work.
     
    Goosehead, 6th Mar, 2020
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  7. wylie

    wylie Moderator Staff Member

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    My comment only refers to ensuring whatever you do that you allow more time to renovate than you think it will take. We were hoping our renovation would take three months. I allowed four months and it took more than six months. That was a long time without rent.
     
    wylie, 6th Mar, 2020
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  8. Goosehead

    Goosehead Well-Known Member

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    Yep definitely happy to take a longer time frame for reno's and allow costings. Especially with China stopping atm. I just don't understand how they work out I'm in deficit by twice as much as me for the same period when I have costed that deficit into my figures. Am I three times out with my costings?
     
    Goosehead, 6th Mar, 2020
    #8
  9. Richard Taylor

    Richard Taylor Well-Known Member

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    Why not look at a Nodoc private loan under the 62 days NCCP exception.

    Sure not going to be cheaper but interest would be capitalised and repaid on sale.
     
    Richard Taylor, 6th Mar, 2020
    #9
    Terry_w likes this.