Browse Forums Home Finance 1 Dec 20, 2012 8:52 pm Not sure if this is the right place to post or not but here goes. We're buying land which will title around June/July. We have the deposit here ready to go, and signed the contract pending finance. The bank had someone value the land, as well as our current house. We don't have to pay the remainder of the land cost (ie the loan amount) until settlement - and even though the bank would give us the money NOW if we needed it they won't say "yes they'll get finance" to the REA/conveyancer to allow the contract to go ahead. The conveyancer said she'll contact the vendors solicitor to ask for an extension, but I was wondering if this is normal? How to people normally get around this?? Re: Help? Title/settlement of land and how to pay? 2Dec 20, 2012 8:58 pm Oh, and we're in Vic if that makes any difference. - MrsT Brought first house in 2008. Renovated...a LOT. Built in 2013. Our thread: viewtopic.php?f=31&t=67954 Re: Help? Title/settlement of land and how to pay? 3Dec 20, 2012 11:20 pm We just got a pre approval letter (as meaningless as it is) from our bank and paid a deposit. There was no valuation until we were going for formal unconditional approval. Not sure what the question is? Re: Help? Title/settlement of land and how to pay? 4Dec 22, 2012 12:49 am MrsT12 Not sure if this is the right place to post or not but here goes. We're buying land which will title around June/July. We have the deposit here ready to go, and signed the contract pending finance. The bank had someone value the land, as well as our current house. We don't have to pay the remainder of the land cost (ie the loan amount) until settlement - and even though the bank would give us the money NOW if we needed it they won't say "yes they'll get finance" to the REA/conveyancer to allow the contract to go ahead. The conveyancer said she'll contact the vendors solicitor to ask for an extension, but I was wondering if this is normal? How to people normally get around this?? Your post seems a little muddled. Not exactly sure what you mean but I will try to answer as best as I can. If your contract is subject to finance for unconditional approval, this might be an issue as because the land won't title until mid next year at the earliest, and most lenders don't give unconditional approval for more than 3 months in advance, they can't offer you a definitive "yes they'll get finance," as they will have to reassess the application closer to settlement date. Why did they value your current house as well? What does that have to do with this? Cheers Tom Re: Help? Title/settlement of land and how to pay? 5Dec 23, 2012 7:51 pm plc Why did they value your current house as well? What does that have to do with this? No. Freaking. Clue. Lol! I was confused too but they said they had to do it. Spoke to a relative who works at the same bank and he said the person we're dealing with has nfi what she's doing, so we're gonna speak to someone else and hopefully they can work out what we need. Re: Help? Title/settlement of land and how to pay? 6Dec 23, 2012 8:48 pm I hope it works out. Clearly that person is confused. Re: Help? Title/settlement of land and how to pay? 7Dec 24, 2012 1:07 pm Maybe they are cross collaterising the loan with an existing one on your house so need the valuation? Cheers Tom Re: Help? Title/settlement of land and how to pay? 8Dec 27, 2012 1:11 pm Very high chance the loans are being cross secuirtized - hence why the bank is carrying out a valuation on your current property. Please...Do NOT cross secuirtize....it has no advantage for you as a consumer/mortgage holder....it only advantages the bank! it can be a costly mistake for the future when you need to sell or uncross etc.. Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: Help? Title/settlement of land and how to pay? 10Jan 02, 2013 4:16 pm shape Very high chance the loans are being cross secuirtized - hence why the bank is carrying out a valuation on your current property. Please...Do NOT cross secuirtize....it has no advantage for you as a consumer/mortgage holder....it only advantages the bank! it can be a costly mistake for the future when you need to sell or uncross etc.. Regards Michael May need to X Collaterise in order to leverage the equity in the existing residence to complete the new purchase thus valuation would have been undertaken. Unless purchaser has (as general rule of thumb)cash to meet 20% of P/Price plus Govt costs etc to go in to the purchase then collateral security would be required to facilitate this. Lenders Mortgage Insurance can be a nasty surprise if Borrowing > 80%. It is not uncommon that a Lender can issue a Finance Approval Letter however it would likely stipulate wording similar to a Prudential Lenders Clause that discloses that the 'Approval' letter can not be relied upon if the facility is not drawn down in a 3mth period. Valuation firms through their Public Indemnity Insurance are required to state that their valuations can not be relied upon by the Lender if funding is not advanced in a 3mth period. Thus the Bank then has to take the same stance from a Finance Approval letter as after 3mths the Valuation they had just obtained could potentially not be relied upon for lending purposes. There is more to it than that such as the National Credit Code implications MrsT12 The bank had someone value the land, as well as our current house. We don't have to pay the remainder of the land cost (ie the loan amount) until settlement - and even though the bank would give us the money NOW if we needed it they won't say "yes they'll get finance" to the REA/conveyancer to allow the contract to go ahead. The conveyancer said she'll contact the vendors solicitor to ask for an extension, but I was wondering if this is normal? How to people normally get around this?? There is method to the madness in getting valuations. Maybe not on the land as I dare say the value came in at Purchase Price and most Lenders would rely on the Contracted Sale Price unless the Land has other 'abnormal' qualities re acreage size or potential contamination etc. I am assuming is your stock standard resi block !!! Would say it is then up to the Vendor to accept the form of Approval or grant an extension. It is catch 22 somewhat...Your Bank can not issue formal approval unless land settlement is closer to settlement date and the Vendor's Bank wants to see that sales are in fact crystalised if relying on pre-sales in a staged development. Communication is the key and having your Conveyancer approach the Vendor to offer an extension on the back of your 'approval' letter is a good step to consider. They may assist on a larger deposit however to ensure you have sufficient 'hurt' money in the transaction so are less likely to walk away from it. Not sure if that answers anything but hopefully may demistify the scenario a little. Deposit Paid 31/10/12 Selections 25/1/13 NHC 28/2 DCA 20/3 Siteworks 2/5 Slabbed 20/5 Wall Frames 3/6 Brickwork Finished 2/7 Lock Up 19/7 viewtopic.php?f=31&t=58864 Re: Help? Title/settlement of land and how to pay? 11Jan 02, 2013 10:29 pm Miss Mia May need to X Collaterise in order to leverage the equity in the existing residence to complete the new purchase thus valuation would have been undertaken. Unless purchaser has (as general rule of thumb)cash to meet 20% of P/Price plus Govt costs etc to go in to the purchase then collateral security would be required to facilitate this. Lenders Mortgage Insurance can be a nasty surprise if Borrowing > 80%. You can still do the above without cross collaterising. Michael is right, avoid cross collaterisation, leaves control in your hands instead of the lenders. The way that the OP commented, I doubt they realise this is even taking place. Cheers Tom Re: Help? Title/settlement of land and how to pay? 12Jan 02, 2013 11:17 pm Cross collaterising won't make a 90% LVR loan decrease to 80% LVR Magically....it's just the way the loan is structured and a simple game of shifting numbers to benefit the BANK rather then you. You can still achieve what you want without cross collaterising. Regards. Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: Help? Title/settlement of land and how to pay? 13Jan 03, 2013 8:21 pm shape Cross collaterising won't make a 90% LVR loan decrease to 80% LVR Magically....it's just the way the loan is structured and a simple game of shifting numbers to benefit the BANK rather then you. You can still achieve what you want without cross collaterising. Regards. My comments were based on a single loan application as is the probable case in this scenario. Like Shape mentioned the structure can be isolated on each property without Xing them and still achieves the Goal. May just mean a few extra Bank fees to draw up two loan documents but worth the expense to have segregation of each asset. Deposit Paid 31/10/12 Selections 25/1/13 NHC 28/2 DCA 20/3 Siteworks 2/5 Slabbed 20/5 Wall Frames 3/6 Brickwork Finished 2/7 Lock Up 19/7 viewtopic.php?f=31&t=58864 Flamingo Give me a call and I will do my best to talk you through it. For those who would like an answer, Subject to seeing your actual DA condition, I think you are… 1 4574 Hi Mofflepop, I would recommend finding a building designer to prepare plans, they should design to your specified budget. The benefit is you can tender the project out… 9 20427 2 5503 |