Browse Forums Home Finance 1 Dec 15, 2009 1:47 am Hi all, we need help and are in kind of a rut. We need a loan to buy a house for $400,000, but on our current income it's not reachable. We are a large family (8 kids living at home!) and there are no rentals big enough, and this house is perfect and under-priced as it's being sold by the bank to recover a bad mortgage. We have a deposit of $100,000. With our current income I think we can only get around $150,000. I'm hoping to ask an investor we know to lend $260,000 instead. This plus our deposit, is $360,000, plus no stamp duty and first home owners grant. This would leave $40,000 remaining on the house cost, making it easier to get a home loan. Then once we got the house we would do a little reno job on it (only needs cosmetic work) thus raising the value a bit more. Then we would unlock the equity and repay the investor, plus pay an extra 5 to 10 thousand, plus any fees incurred by said investor.
This is a plausible and a reasonable offer is it not? Firstly the house is way under priced, it is basically a mansion, with a lot of land around it in suburbia. It's a little rough but it requires only a cosmetic reno which would definitely add around $80,000 to $100,000 (we also know and aware of the house values in this area). We've just recently completed our first reno on a smaller house, and we almost doubled the value of the property from $150,000 to $280,000, so we have a little experience. (We've previously been doing reno work for other people, so we do have experience). We are pretty desperate and this seems to be our only way! What do you guys think? Can you see anything wrong with this proposal? Thanks Sorry I posted it in the wee hours of the morning, forgot some details... I'm the one who would buy it for my parents to live in with their 8 kids, and I would live there for the required six months of the first home owners grant (it's got 12 bedrooms!!!). My parents would then rent it after 6 months, thus covering the repayments of the loan. They currently pay $400 a week for a much, much smaller place. My parents can't get a loan for the place, because of the many kids, and a bad credit history (take away shop went bankrupt a few years ago). Re: Does this offer sound possible/fair? 2Dec 15, 2009 6:21 am It sounds good if you know an investor interested. Would the land be sub dividable? That would be attractive to an investor. You could keep the house with some land and the developer could put a house at the back. You would make a nice profit too, getting rid of a chuck of your mortgage. Good luck (8 kids- WOW!). Re: Does this offer sound possible/fair? 3Dec 15, 2009 8:08 am The banks wont give you the money because you cannot afford to pay it back. Even if you increase the value of the property, you still cant afford to pay the loan back. Why would the investor give you $260,000 if you cant afford to pay it back! Unless you go halves in the property, but investors generally do it for profit not for love, you would have to sell it as soon as it is done to repay the investor, or like the other poster suggests the only way it would work would be if you subdivided, but you have only put 30%, I dont see you coming on top with this. Good Luck. Re: Does this offer sound possible/fair? 4Dec 15, 2009 12:06 pm After the renovations you would owe... $40,000 for the original loan $100,000 for the renos $260,000+ to pay back the investor. So $400,000+. What is changing between now and when the reno's have finished and you owe the above money? Are you getting new higher paid jobs? Are some of the kids going to be working and paying off the loan as well? If nothing is changing I'm afraid its a pipe dream. Having equity in the home does not mean you can actually service the loan. Re: Does this offer sound possible/fair? 5Dec 16, 2009 12:43 am Sorry I posted it in the wee hours of the morning, forgot some details... I'm the one who would buy it for my parents to live in with their 8 kids, and I would live there for the required six months of the first home owners grant (it's got 12 bedrooms!!!). My parents would then rent it after 6 months, thus covering the repayments of the loan. They currently pay $400 a week for a much, much smaller place. My parents can't get a loan for the place, because of the many kids, and a bad credit history (take away shop went bankrupt a few years ago). Re: Does this offer sound possible/fair? 6Dec 17, 2009 2:16 am dont forget you would be subjected to capital gains tax by doing this. building heysen4e through SarahHomes at Milang IM THE PROUD OWNER OF DIRT house into council 22/08 Unconditionally approved 25/09 mortgage docs signed 29/09 land settled 09/10 land titled 22/10 start date about two weeks away!!! http://www.mymilangbuild.blogspot.com/ Re: Does this offer sound possible/fair? 7Dec 17, 2009 7:00 am Where on earth do you get a property which has been 'under priced' in Australia I know what your saying, but I am such a doubting thomas & you know the saying "when it's too good to be true " be careful & best of luck Jazzie Life is like a lolly, suck it and see Re: Does this offer sound possible/fair? 8Dec 17, 2009 11:48 am I do sympathise with your situation and good on you for trying to come up with a creative solution. That said, unfortunately Ari is right. "Unlock the equity" does not mean that the bank gives you money. It means that you can apply to increase your mortgage up to (usually) 80% of the property's value. The bank has the exact same criteria for working out loan serviceability on this scenario as it does with the original loan. If the bank will lend you $150k now it doesn't matter if the house is worth $1m. Unless your income situation changes they will only lend up to $150k. Hope this makes sense. That said, travelbug's idea is a good one. Find out if the investor will pay $260 for your yard. Re: Does this offer sound possible/fair? 9Dec 19, 2009 7:11 am Better change this as I must admit, I had posts and houses mixed up. In general it does make me wild that people need to go to these extremes in Oz lately but , this house does sound special and very different and as I've added below , it does have potential IMO because of what it is .
In general though, we do need to start putting our foot down with the house price craziness in this country IMO , we're just being screwed from every angle right now. Good luck anyway. Cheers Re: Does this offer sound possible/fair? 10Dec 19, 2009 9:35 am rena For you, I'd forget it and keep looking myself, it's too much to pay for a bloody house. We all need to start putting our foot down with this house price craziness in this country IMO , we're just being screwed from every angle right now. Good luck anyway Cheers 400k for a 12 bedroom house? I think depending on area that's bloody cheap even if you were to compare to US prices. Re: Does this offer sound possible/fair? 11Dec 19, 2009 10:25 am joeygbh rena For you, I'd forget it and keep looking myself, it's too much to pay for a bloody house. We all need to start putting our foot down with this house price craziness in this country IMO , we're just being screwed from every angle right now. Good luck anyway Cheers 400k for a 12 bedroom house? I think depending on area that's bloody cheap even if you were to compare to US prices. Actually , your right ! Should I say our typical 400k suburban rip offs are just that compared to , well just about anywhere actually but , this one does sound potential! I'd just finished reading another similar scenario on the typical house, flicked back and got them mixed up, screens too small and club posts often get a bit confusing to read after a few , sorry about that. This place does sound special actually with it's size , extra land and even if it comes close to the mansion style, could be worth a lot of bucks down the track or have a good sideline developing potential of some sort. All about area though as you say. I'd be taking a bigger look at it from here , if you'd don't mind the work and wangling involved in a deal. Cheers Hi, we live in an area where the black soil is prone to a lot of movement. We have an old 50's house with masonite everywhere and nails popping out, warping, rusted etc.… 0 4510 Was the offer also on their website? If so, you could check the Wayback Machine. 1 638 Hi We have a road close to our place and only an old flimsy wooden fence between us and the Neighbour closest to the road. Any ideas on a sound proof modular fence. Like… 0 7472 |