Substitution of Security

I am worried that I will have issues succeeding in a Substitution of Security when I sell my home in a Low Risk Brisbane Suburb (Risk Rating 2) where I have a $400K mortgage to buy a $230K property in a Risk Rating 4 suburb with a 60% to 80% Mortgage - My communications to date with a popular sunny bank in Qld indicated that no finance application was needed and all I had to do was provide sale and purchase price contracts and if valuations were OK then substitution of Security to 80% would be OK. I think they may have assumed that I was buying in the same Risk Rating area - but now i am contracted to buy (conditional on sale of existing) in a risk rating 4 area (more than 6 months to sell), I have seen that the purchase property bank valuation meets the Sale Price but the Risk rating is 4. Being a senior now and in the back end of the mortgage - 9 years left , I do not want to go through the trauma of a finance application.

 

Probably will be ok, unless the property is physically challenged.

 

Which risk rating was a 4? On typical full valuation there are 8 Categories in the Risk Analysis section, 4 under property risk & 4 under Market Risk - some mean more than others.

 

Dont have a copy but Market Risk was 4 - not sure about property

 

Doesn't look like any 'x' in 4 or 5 so I don't think you'll have anything to worry about in my opinion

 

Agree with Rolf. That LVR combined with only one '4' should be no issue unless it affects overall LVR restrictions.