Hi our broker has just suggested that there is problem getting banks to loan for mining areas for a few reasons,
- Property Type, Postcode and loan size could be an issue with the mortgage insurer
- Bank Valuation may not agree with purchase price of $800,000 due to recent sales
- Valuation may not agree with Rental Income and the Bank will most likely agree with the valuer
we were about to brave, but are now not so sure has any body experience with this.
Thanks
Robyn
Hi Robyn,
Yes just been through the exercise to purchase in Narrabri. I’ll address each point you made with what we found to be our experience.
* In rural areas such as Narrabri lenders would only loan with a P&I loan & not an interest only loan due to location (post code).
* Had no issue with LMI and were able to get 90% LVR with LMI capitalised on top.
* We used ANZ with their Breakfree package
* Have to do your homework here, need to supply the valuer good supporting data (comparative sales etc) to make sure the value comes in where needed.
* In our case the initial value came in below the house & land package price, so it took another two months to get the value reassessed with relevant data on the land being improved, not unimproved as the valuation was first based on. We also showed that house & land packages being built by other developers had a much higher price than our equivalent package, as we had bought at a discounted price. This meant that sales being struck now and in the future would back up the valuation price given to the bank.
* Yes the bank will most likely side with the valuation. As per the point above, get as much data as possible to support your application. In our case we also supplied local real estate letters showing current rents and the rent that we would achieve for the property once completed.
* Also supplied further information that the local mining companies were very interested in leasing if for 5 years, again backing up the expected rental returns.
My words of encouragement would be if you see that the purchase is going to fulfil your outcomes and returns, persist with the purchase and maybe find another broker. It took us 6 months rather than 2 to settle on our purchase due to the factors above.
Regards
Dave
Thanks Dave, very comprehnsive and useful answer, question though were they using local valuers? I know previously we have had a local one for our PPR but city ones for all our other properties and the did not leave the office which was OK because the prices were right (we are looking at a similar area to you) also how did you get the banks to cough up the details on who they were using, ours refused we even had to fight for the valuations last time even though we pay for them - very annoying.
Robyn
Hi Robyn,
The valuer was local and was also known to the developer, so when we sent the valuation back to developer, they as you might say were a little miffed. The same valuer completed the valuations on the house & land package sometime earlier for the developer which came in higher than what was valued for the bank with ours.
To say having this back door or contact was extremely useful is an understatement. It allowed us to challenge the valuation and submit the relevant data regarding the errors on the land component and successfully have the valuation amened, something valuers do not usually do.
If in your case the bank will not give you the valuers information, that means that you’ll have to most likely find a local one, pay for another valuation and then challenge the valuation the bank has from the city based valuer.
Regards
Dave
Contacts are invaluable, thanks for that
Robyn
http://genworth.com.au/docs/lender-resource-centre/location-guide-australia.pdf
This link takes you to one of the two mortgage insurers lists of places they will give mortgage insurance for. If your property is not on this list you will usually need 20% deposit although it lists on this document that they will consider other postcodes.
I got 90% in Emerald and no problems with valuation, although a friend said the realestate there said some people had had valuations come in low. They suggested get a valuation done first and use this as a negotiating tool. I guess it depends how fast prices have been going up, if they have been going up fast the valuations may come in low.
Thanks for that, yes I have noticed when using APM that they are sometimes way under the selling prices which can be a bit off putting and makes you question whether it really is a good buy or not - a crystal ball would be wonderful right now.