This month we were approached by a property investor who had contracted to purchase a residential property at New Lambton, New South Wales, with a finance approval in place from a second-tier lender subject to valuation.
The valuation firm for the second-tier lender noted that whilst the new home on the property complied with the DA, the pre-existing home on the property had to be demolished prior to them funding the settlement. This left the customer in the precarious position of not being able to settle the property on time.
The customer was seeking funds to enable the settlement and meet the removal costs of the existing non-DA approved home.
The property was valued at $1.225 million, and a loan of $866,000 at 8.94% per annum with a 2-month term was provided.
The loan to valuation ratio was 70.69% and the second-tier lender will refinance our debt under their current approval once the pre-existing home is removed.
This article appeared in our October 2020 Investor Newsletter – download the full newsletter here.