Deposit Questions

Any general questions you might have in regards to loans and finance.
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foil
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Joined: Mon Nov 09, 2009 9:54 am

Deposit Questions

Post by foil »

I am wanting to buy land for $200,000 and have looked at a land loan which states that you can borrow for land only within a timeframe before building. Ive check to make sure the area I'm building doesnt have any restrictions etc, so all OK there.

To purchase the land I have to give the developer a deposit of $10,000 (that I have in funds). The contract that I sign with the developer is conditional pending financial approval, so if my loan falls though I can recover.

Then, for the land loan, the bank wants atleast a 10% deposit (+LMI and charges)

If I put a further $10,000 during the loan process, (plus fees, LMI) does the $10,000 I paid to the developer become part of that deposit or would it not be consider "genuine savings"?

Also if I was to get a full construction loan (for land and build) I would need 380-400K, some banks state they need 5% deposit, (which I would have) but I hear that they never approve them? Is that true?

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Otto Dargan
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Re: Deposit Questions

Post by Otto Dargan »

The money would be considered genuine savings if you prove that the money was saved or held in an account for 3 months prior to you paying the developer. Where did the money come from originally?

The good news is that if at this stage you just need to borrow 90% then you should qualify for a loan with no genuine savings anyway. No genuine savings loans are harder to get for vacant land however they are available depending on your situation.

Also not all lenders have the requirement that you build within 6 - 12 months. And there are many that have this requirement but do not enforce it.
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foil
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Joined: Mon Nov 09, 2009 9:54 am

Re: Deposit Questions

Post by foil »

Well to give you a background...

Im wanting to buying this lot of land, costing $200,000 (to be built on 6-12 months)
Ive already paid $10,000 which was a gift.

I have accumlated the other $10,000 in savings but only over the past month, working 2 jobs doing temp contract work, and living on my partner's pay I have been pretty much been able to put my salary completly aside. I also have a rented property in another city, that gives me another income that I put there too. (that property is locked up with a family pledge so I cant use any equity in it, already looked into it.)

So I need a loan for $180,000 for land worth $200,000

Before I started saving I used that money for paying off a CreditCard debt, now closed. But I think now I should have just kept it open and put the money in a savings accout to make a "history" up. Cause I'm pretty sure I would get a loan still having a credit card (so essentially attacking debts first is bad... ahaha)

Buying together we are on about $136K gross a year plus $14K rental income. I owe $310,000 on my existing home loan ($2201/m) and have a personal loan for $30,000 ($550/m).

I have $20,000 in non-genuine savings. And so far I cant do anything with it. Unless my only option is to cancel the land and get the $10k back, keep the now $30K in a savings account for the next 2 months and then try again!

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Otto Dargan
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Re: Deposit Questions

Post by Otto Dargan »

Indicatively it looks like you may qualify for a genuine savings loan as some lenders will consider that you have equity in another property as genuine savings. Depending of course on how much equity you have. May I suggest that you give us a call to discuss in more detail 1300 889 743.
Otto Dargan
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P | 1300 889 743
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foil
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Joined: Mon Nov 09, 2009 9:54 am

Re: Deposit Questions

Post by foil »

OK. Thanks for your help.

But I doubt the equity thing will work. Its a family pledge from St George, And even tho the house is valued at $350,000 and I owe $310,000 that $40K is held up with something because of the fact my parents had to give some equity from their property. St George refused to see it as equity. Iam on my last year at fixed rate, after that I'll look somewhere else to refinaince.

Thanks Again!

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Otto Dargan
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Re: Deposit Questions

Post by Otto Dargan »

That would be accepted as genuine savings by other lenders. St George is very conservative in the way they assess equity in other properties as genuine savings.
Otto Dargan
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P | 1300 889 743
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foil
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Joined: Mon Nov 09, 2009 9:54 am

Re: Deposit Questions

Post by foil »

Ohh, I did not know that! So that could be used to pass the genuine savings requirment even tho I'm using my own funds for the deposit?

I will call later today.

Thanks again Otto.

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