Vacant Land Purchase – the clients:
Mr A and Mrs A (not their real names!) run their own individually successful businesses. They also own a house each. Each house is valued at approx. $1.2m, and each mortgage is approx. $500K. They are looking to buy a vacant block of land to develop into their own home. The land is valued at $1.27m.
Problems:
- They haven’t done tax returns for 2 years – hence it must be a low doc loan.
- They have been turned down by 2 banks already. Part of the reason is that the property which they had their heart set on for their vacant land purchase, was not acceptable to the banks as it was considered too big or too regional to use as security.
Solution:
We refinanced their existing mortgages to a lender that allows cash out without any questions. This was done as an low doc loan. We got owner occupied rates on the entire investment loan (lender allowed cross-collateralisation of the properties hence owner occupied rates). They borrowed up to 80% against both properties leaving a surplus of $920,000 cash. They only needed an accountant’s letter for one applicant and 2 recent BAS statements for the other applicant. We found another lender that would lend them a mortgage against the land.
Thankfully because we were able to borrow $920,000 at lower rates against the existing properties, this meant that they only needed to borrow an additional $300,000 against the land.
