Sorry if this is a stupid question!
How does it affect you if your land is valued lower than what you paid for it?
I paid $460,000 for my land. If they valued it at $430,000 for example, how would that affect me?
I plan on living in that house for about 30 years or so. I don't plan on moving anytime soon!
If your land is undervalued and you don't have the savings to make up for the loss, the bank may not give you a loan unless you can come up with the money.
However, as in your case, you're going guarantor - you will be able to avoid LMI and the cost of any potential loss in value so long as your parents are able to cover the variance.
Which bank are you with by the way? Seems like you have very good terms.
One word of advice, dont bank on the idea that you will stay here for 30 years. We did that with our old home and it did not pan out like that at all. Lesson learnt!! Not to say you wont stay, but dont bank on it and you're spot on, market will fluctuate all the time. We're going into a 3 year decline over the next few years so if we need to sell, it will not be to our benefit.
Thanks Cooky for your reply
Uh huh. I'm so bad with numbers they make my brain hurt...haha! Just to clarify. For example...I paid $460,000 for my land. If the banks values it at $430,000, does that mean I need to come up with $30,000 cash?! I hope not!!!!!
I think I'm all good on the LMI front.
I'm going through a broker called Greenspan. They're in Liverpool. They've chosen Heritage Bank for us. They're really good! Well, from what we've seen so far.
Haha! Well, I think I'll stay there for 30 years +, we'll see!
I think for now...there's absolutely nothing I can do. Just sit tight, wait for the land to register, and if sh** hits the fan later, deal with it then
Correct, so if your lot is undervalued by 30k, bringing it's worth to 430k and not the 460k you paid, the bank will require you to either produce the additional 30k in cash or the other option of borrowing more and then paying LMI; going over 80% lvr. But speak with your broker, as if you're going guarantor thst can be accounted for if sh*t does hit the fan.
We paid 630k for ours, and whilst per sqm it's less than what a 400 sqm house cost, it is still a lot and I dont think itll be worth 630 in June. We'll see I guess.