Buying first property ....

[cj2]

Hi

Need some advice. How does one buy a property when you don't qualify for bank lending but can happily service a mortgage and come up with a decent deposit. I'm self employed.

Comments would be greatly appreciated. (This is a home for us to live in, not a rental).

Tks

[Dunning]

If it's only lending that's the issue go and see a mortgage broker. Even if it's just for a quick chat they will be able to possibly give you options. Being self employed you may need to have proof of income etc but that won't be needed on your first chat.

Do make sure that you know how much you want, how big your deposit is and how much you earn. eg 390k house, 40k deposit, 80k per year after tax.

[motivated]

Do A Lease option. A lease with option to buy. Many people call it "rent to buy".
There are people out there that specialise in these, or you may find a vendor that will do it

[cj2]

Hey Dunning & Motivated

Ok here's the thing. We have business debt that stops us from meeting the banks lending criteria. So we're really looking for a way for us to purchase a property without having to consider our previous debt.

We can easily support two loans with our current income but with lease options we've found you eventually have to get a bank involved 3-5 years down the track i.e. when the leasor wants to settle. At that point we still wouldn't qualify for a bank loan.

Any more ideas??

Tks

[Dunning]

I'm not sure if this could work for you but you could set up a structure such as a LAQC or a trust that owns the property and you and your wife as directors. This may be enough to separate the house purchase away from your personal commitments to your business. If you live in it then you won't be able to claim any tax refunds against it but you wouldn't have been looking at that anyway.

A lawyer who deals in this will be able to help you. I'm also sure that someone on here will point out the flaws and advantages in doing either of these.

[cj2]

Hi Dunning

Sounds like a good idea. I'm not sure how it would work. Are you saying that they might not look at our exisiting business debt if we set up an LAQC or trust and put the house under that?

If this is the case, then I wonder how much of a deposit we would need for a trust. I realise this could be more substantial than a 10% or 20% deposit - that's ok, as long as we know what it is that we need to work towards so we can start planning.

Tks for your help.

[Niall]

We have business debt that stops us from meeting the banks lending criteria.

We can easily support two loans with our current income but with lease options we've found you eventually have to get a bank involved 3-5 years down the track i.e. when the leasor wants to settle. At that point we still wouldn't qualify for a bank loan.

Tks

To convince anybody to sell you a house by lease option/ vendor finance etc, you really will need to give them an idea of when you can qualify for a bank loan.

If you have been turned down for a loan the bank may have told you "why". Work out how long it will take to solve the "why".

You might not sell your car to someone who couldnt tell you when they could get a loan to buy it, would you?

All the best,

Niall

[motivated]

Look for other scources of money. Maybe find a property where the vendor will leave money in. Solicitors nominee money is another possibility.
I also suggest you go and see a good broker. They have many sources of money and will have seen situations like yours before.

[cj2]

Hi Niall & Motivated
Niall - good point. You're right there - I wouldn't want to sell my car to someone that couldn't commit to getting a loan to pay it off. I'd be asking for the cash up front but unfortuantely for a property it's different (we're in Auckland by the way).

Motivated - we have spoken to a few mortgage brokers but they all say the same thing. Reduce the business debt which makes perfect sense but it will take us years and when I say years I'm talking a very long time.

Have tried vendor financing - on a $180K house the lenders wanted us to come up with $100K! That was with the vendor leaving in $20K for a 3 year period. Really need something very creative here. Will look into the Solicitors nominee money thing. I've not heard of that before.

Tks for your input

[EagleEyes]

where in Auckland are you?

Hi cj2

Where abouts in Auckland are you or are you prepared to live?

EE

[cj2]

Hi there - my son goes to school in Hillsborough so it has to be around there. We have been thinking about getting an investor to hold the mortgage for us, similar to a rent to own but with slightly different terms. We're looking at between $350K + $400K simply because of the area. Otherwise would love a house for $200K !! Tks

[cj2]

Hi motivated
Called a solicitor yesterday regarding your suggestion around solicitors nominee money. These were the terms:
They can lend up to a max of 66% so we have to come up with 34%
Interest of 9%
Interest only mortgage
Loan is revisited every 2 years with a view to getting the loaner to get a proper bank mortgage after that time, if not can roll over another 2 years.

It's definitely an option if we want although the interest rate puts me off. Thanks for the suggestion.

[speights boy]

Howdy cj2

may I ask what is your motivation for wanting to take on this extra debt, as opposed to reducing your business debt?

cheers
SB

[Dean@Massiveaction]

My broker can help you, contact Kris on 021300192 or [email protected]
If the facts are roughly as you indicate there are a raft of solutions :-)

[cj2]

Howdy cj2

may I ask what is your motivation for wanting to take on this extra debt, as opposed to reducing your business debt?

cheers
SB

My partner and two kids are currently living in my mother's garage - you asked.