Island finance expert Sandra Thomas of SMBI Financial Services says the the situation in relation to gaining loans from institutions for island home and land purchases, continues to change.
She has provided The Friendly Bay Islander with an update on what you can and can’t do to assist in obtaining a loan.
Things are always changing with policy and also the lenders’ “appetite” for what they are looking to add to their borrowings book.
RELOCATION LOAN
Sandra says: “I have a lender offering relocation loans.
“This is a viable specifically to help you through that small window of time between purchasing your new home and selling your existing one.
“In a perfect world, our settlement dates would all match up but sometimes this just isn’t possible, in which case you may require this type of loan to tide you over,” Sandra says.
In a Relocation Loan, the amount of your commitment is calculated by adding the value of your new home to the amount of your outstanding/existing mortgage and then subtracting the estimated sale price of your home.
The amount left over is what’s referred to as your ‘ongoing balance’ and represents the principal of your loan.
As standard, Relocation loans are interest-only. During the sales period, whatever that may be, usually up to 6 months, interest will be compounded monthly on your ongoing balance at the standard variable rate and interest bill will then be added to the ongoing balance when you sell your house, and this amount becomes the mortgage on the new property.
FIRST HOME BUYERS GRANT
Sandra Thomas says: “The main change with this is that we can now use this money as a deposit for First Home Buyers to purchase a SUBSTATIALLY renovated home. This opens doors for the Islands as many people have done this in recent years. It has gone down to $15,000.
PENSION BORROWERS
Sandra says she can only find finance for Pensioners if they have another income. “This is because the amount paid by the government is usually only what the (HEM) Household costs amount that is determined by government bodies, is all that’s paid. Pensioners will also require a WAY OUT. This can be Superannuation or another Land/House to sell.
VACANT LAND
It is easier to borrow on land when a construction contract is also presented.
“However, I can do a Personal Loan over seven years which can then be paid out once construction begins or is completed.
“The banks will not lend for Owner Builders, Partially Completed properties, Kit Homes or Relocatable Homes.”
CONSTRUCTION
There is no way around it; you must have a fixed Price Contract with a Builder.
“I can still obtain an 80% borrow in most cases with FHBG being used as part of that deposit.
“The banks will not lend for Owner Builders, Partially Completed properties, Kit Home, Relocatable Homes.”
PURCHASE OF HOUSE
Available on purchase contract through a Licensed Real Estate Agency, under 80% lend to value usually without a valuation.
Normal Lending criteria such as 20% deposit and costs required.
Character, employment and servicing should be evident.
Refinancing is available with the usual criteria so if your paying more than 4.5% I maybe able to save you money or decrease your loan term for the same payment