Does anyone know which lenders, will lend on display homes?
Who Are Display Home Lenders
Lelvesg on 12/01/2022 - 09:40
Comments
I have been trying for a couple of months, but they are having issues getting lenders for some reason.
Banks - standard, will not lend to display homes.
outside lenders, may lend for 2 months, but the upfront costs are over $5000 in fees and 24% pa interest rates, if they value the place high enough.
Cheaper than borrowing from Cash Converters I guess.
lol, never done it, wouldnt know
When you say "lending on display homes", are you referring to a purchase of a land and building package (using a display home as reference)?
No, a display home that they are selling. I am having trouble with finding lenders, even with a broker.
I do not understand why a "display home" makes any difference to the lending? I assume it will be the same as buying an investment property?
I believe because on occasions the settlement can be in 60 days and then the display home company will rent the property from you for say the next 12 months.
It just means another contract is in place that can complicate things and banks hate extra conditions.
will rent the property from you for say the next 12 months.
I would be worried about insurance during that period.
Why? The purchaser would insure it. Or the tripartite between purchaser and leasee would condition the leasee to pay.
it is also commerical, and not lived in.
The builders are leasing back the property and while you get rental income for some reason the banks do not like to lend to these.Maybe a bit over priced too due to higher end inclusions that you are paying for.
I am using a broker and he has two, but they want me to form a company (so my costs increase) and private lenders lend for two months, the interest rates are over 24% pa, and a bout $6000 upfront fees, application, valuation etc. I just find it exhorbitant and eye gauging
What's the term of the lease?
To expand on elvesg reply here as well, the problem is the income that's tied to it is commercial in nature, and as such, the bank policy would be to give you a commercial loan for it (slightly higher rates, shorter loan term, more control etc) but they can't, because the law says if you lend to an individual, for the purpose of purchasing residential property, you need to be protected by the NCCP act, and they can't do that with a business loan, so they get stuck. If you form a company, they can give you a business loan and it's all sweet.
Not to mention most banks are super nervous about anything to do with home builders at the moment with a few of them going belly up recently.
Thank you, that explains why they want me to form a company.
overcapitalised property (for the local context) and rents are north of 6% gross yield.
Just pay cash…
not being disprespectful, but if I am asking for lenders, I don't have the cash. If you do maybe we can do a deal?
but if I am asking for lenders, I don't have the cash.
You didn't state that.
Some people have the cash, but borrow for negative gearing…
understood. Yes I was asking for display home lenders, implied lending required.
Appreciate your comment though@elvesg: Now worries.
I had no idea lenders differentiate on display homes vs existing homes.
Do they also differentiate on owner builders?
If you're homeless why don't you just buy a house?
nobody mentioned homeless, this is a bit of a weird comment and does not relate to the topic.
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Tried Lendi.com?
I have not tried them. Thank you
Least buying an already built display home from a volume builder you can see what your getting, the quality (or lack of it) and not variation after variation during the build only to get a big steaming turd at the end worth fuk all in resale value
You would expect the a volume builder will have high standards for their display homes, unlike their normal volume builds. who knows they probably dont use their normal trash tier quality trades to build display homes
yes it is a quality build
They have quality of the finishing in the rooms, what is underground, in the walls, roof I'd be concerned about. Given they knew they would it would be a display home, they probably didn't do the tidiest job.
building inspection completed, it still needs to comply with building codes and council requirements
Yes but there are passing building inspections and doing a top job on all the invisible stuff. You can pass inspection and literally have 100 defects in your property. I'd be wanting a significant discount if it was a display home.
Bank of Melbourne did it for us in Victoria, so maybe try the Westpac or St George since you're in NSW?
Brilliant thanks, I was told main stream banks will not lend
Is this a new house in the 'burbs, yes ? Then what has commercial got to do with it ? Talk to liberty.
because it is a displayhome, not lived in and will be on a leaseback, therefore commerical.
commerical because they still require it as a display home.
Not technically lived in, actually never lived in, so not applicable for lending purposes.
it is new,thanks for your response
One thing that banks don't like is if the display home is located in a display village. Banks' recourse if the loan goes belly-up is to sell the property to recoup their loan, and anything that will restrict your likely pool of buyers can affect the bank's decision whether or not to lend. A display home in a display village cannot be lived in so straight away you're reducing the potential pool of buyers to long term investors only. Also restrictions around LVRs too as mortgage insurers aren't generally too keen on them. They're on QBE's Unacceptable Property list, and Genworth has some restrictions also:
If the subject property is situated within a designated ‘exhibition village’, and the active life of that
village has more than six months to run, LMI is only available in the following circumstances:
o There is no reliance on rental income from the security, or
o A bank guarantee is provided to the Lender by or on behalf of the borrower for an amount
equal to the total rent payable from the date of commencement of the loan until the date
the exhibition village will cease to operate
• Genworth will assess rental income at normal market rates based on the valuation or existing
tenancy agreementIt's weird, when you consider that Defence Force homes are on long term leases but banks don't generally have trouble lending to investors for those.
.I guess because they're not in exhibition villages.
thanks
Westpac has lent, no Lenders mort insurance, rental income ok, physical valuation on point
Talk to a mortgage broker if you're having trouble.