Multiple property purchasers and upgraders

The Scenario

Home upgraders, Jonathan & Sue are married with three teenage children.  They live in Newcastle and have stable employment with the education and health sectors.

They owned three properties including their home. With a background in building, Jon is always looking for opportunities to turn a standard house into cash positive investment.

How they came to Vision

Jonathan & Sue were originally referred into Vision by a real estate agent.

They were presented with the opportunity to purchase a property that was ideal for a dual-occupancy investment. There was enough equity in their existing properties so they would not need to contribute their own capital.

The main challenges

The main challenges here became apparent as we unpacked the deal:

All of their existing loans were cross-collateralised AND fixed

Even though Sue had years of industry experience in her position she was currently casual employed

They wanted to be sure that all phases of the deal were possible from the start – i.e. purchase plus construction

They didn’t want to pay any mortgage insurance

Because of Jon’s background there was a fair bit of work he was capable of doing himself but he didn’t want the restrictions of owner-builder

We couldn’t put everything with their existing lender due to policy issues

How Vision helped

We unpacked the client’s objectives and looked for a solution with multiple lenders. Because time was a limiting factor we had to make sure the client wouldn’t lose the opportunity with the property.

Every way we looked there was going to be a cost – LMI, break costs, etc. We were looking for the most efficient and least costly option.

What was done?

Vision arranged:

Cash out from the existing securities to complete the purchase. This was done to the highest amount without incurring LMI

Approval to purchase the property with the same bank

Pre-approval with a different bank to refinance the purchase after settlement

Pre-approval to complete the construction of the additional property as per the building contract and quotes.

Yes there are now discharge fees incurred but that is less than any potential LMI against the cross collateralised properties or the break costs for the fixed rate loans.

Where to now?

Jonathan & Sue are now getting ready to settle on the purchase and as soon as that is completed we’ll be moving them across to the other lender to start on the second phase of the development.

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