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Finance query

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  • Finance query


    I have discovered a property up for auction which I think will be a good buy for the right price. Unfortunately the auction is only a couple of days away and for various reasons I won’t have the time to organise finance against the property. So, if I’m successful, I will have to cash in other investments and pay for the property in cash.
    My query is: can I somehow organise to borrow against the property at a later date (i.e. a mortgage and treat it as an investment property) even though I have paid cash for it? I realise this isn’t even close to the right way to go about raising finance but I just want to know if this is an option.

    Thanks for any replies


  • #2
    Hi Jill - I wouldn't go cashing in other investment just yet.

    Many of the bank advertise 1 hour or 24 hour pre-approvals. Let them know how much you want to borrow, how much the rent will be, how much you earn, details about your other investments, and they should be able to turn around a preapproval very quickly. It will be conditional on getting evidence that everything you said is true (e.g. rental assesment, valuation, etc).



    • #3
      Thanks for your reply Gerrard

      Unfortunately I won't have the time to get a valuation etc done in this case so I'm still wondering if its possible to organise a mortgage as per my original query.




      • #4
        Hi Jill,

        If you do what you propose, then bear in mind that the interest paid on the mortgage that you will raise to replace your initial cash used to buy the house, will not be tax deductible, unless you then use it for another income-producing purpose (eg. another investment property).


        • #5
          Surely you only need to pay a deposit at the drop of the hammer NOT pay for the whole house.
          Settlement should be over a week???


          • #6
            hi Jill - can you tell us a bit more about the circumstances. You might have to go unconditional at the auction, but there will then be a period of time until settlement. This time is typically needed to arrange the finance and laywers to do their things.

            I can't imagine a circumstance where settlement occurs on auction day.



            • #7
              You will be able to claim the interest when you refinance if you handle it correctly.

              Firstly - regarding paying for the property at the drop of the hammer. Get the preapproval from your bank and at the drop of the hammer, if you are successful, you will be paying a 10% deposit (check with the agents though to confirm auction requirements). You then have time to sort the rest of the finance out before settlement.

              Secondly - lets say you did happen to pay the entire property in hard cold cash on day 1 of settlement and then wanted to refinance it later to get your cash out. The way you could handle this is to loan your LAQC or Trust the money to buy the house. When the LAQC/Trust refinances the property it will repay your personal loan and life continues as before. Interest is chargable and payable and claimable.


              • #8
                Jill, now that D-day has passed how did it pan out?
                Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!