Iden go between building sept 2012
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Go-between and construction loans from Iden Loan Services allow homeowners to purchase or build a new home before selling their existing home. Go-between loans offer no loan repayments until the existing home is sold, while construction loans provide progressive loan payments during building. These options simplify the process of bridging the purchase and sale of a home to avoid multiple moves or maintaining two mortgage payments at once.
Iden go between building sept 2012
- 1. Iden Loan Services Go-Between & Construction Loans www.iden.com.au Correct as at Sept 12, subject to change without notice
- 2. What is a Go-Between Loan? Offers an easy way to purchase or build a new home before selling the existing home Rather than 2 sets of repayments, whilst selling the existing home no repayments are required The length of the Go-Between period will depend on whether the customer buys or builds their new home www.iden.com.au Correct as at Sept 12, subject to change without notice
- 3. Go-Between Highlights Principal & Interest Interest Only Fixed rates (from the outset!) Variable rates No rate loading 100% offset (from the outset!) Lo Doc Loans www.iden.com.au Correct as at Sept 12, subject to change without notice
- 4. Go-Between Loan Repayments The repayment amount will be based on the end loan which includes: Loan amount required to purchase/build the new home; plus Accumulated interest on the new loan during the Go-Between period; less The agreed amount by which the new loan can be reduced upon sale of the existing property www.iden.com.au Correct as at Sept 12, subject to change without notice
- 5. Buying an Established Home A new loan is established to purchase the new home Refinances existing loan at the time of application for the Go-Between Interest is charged to the new loan as normal and no repayments are required until the existing property sells (maximum of 6 months) www.iden.com.au Correct as at Sept 12, subject to change without notice
- 6. Established Home Once the existing property is sold, the customer must pay sufficient funds into the new loan so that it reduces to the amount specified in the Go- Between Loan Contract. The customer must be made aware of the interest capitalisation and the need to sell the property at a realistic price, within the agreed time frame. www.iden.com.au Correct as at Sept 12, subject to change without notice
- 7. Building a New Home A new loan is established to purchase the land and cover construction costs Continue to make repayments on existing loan Interest is charged to the new loan as normal and no repayments made on that loan until the existing property sells (maximum 12 months) www.iden.com.au Correct as at Sept 12, subject to change without notice
- 8. How much can we borrow? Up to 100% of the new home value plus fees and charges Combined loans cannot exceed 85% LVR (80% Lo Doc) including any capitalised LMI premium Capitalised interest must be considered in the LVR calculation Assessment is based on the repayment required once the existing home is sold (End Debt) Loans up to $5.0m may be considered. www.iden.com.au Correct as at Sept 12, subject to change without notice
- 9. Application Details In all cases where LMI is required (i.e. peak debt or end debt is >80% for full doc and 60% for Lo Doc), cover must be obtained at loan approval stage. The LMI premium is calculated on the peak debt. Full valuation required on property to be sold. Normal valuation criteria applies on new property. www.iden.com.au Correct as at Sept 12, subject to change without notice
- 10. What if I dont sell my home in the Go-Between period? Once the Go-Between period ends (maximum 6 months established home, maximum 12 months construction) and the existing home has not been sold, repayments will be required on both the existing and new loan. Application for extension (3 month) available. www.iden.com.au Correct as at Sept 12, subject to change without notice
- 11. Scenario Existing property valued at $400k (customer owes $170K to BankC) Customer signs contract on new property for $550k and pays a $10k deposit Calculate 6 months capitalised interest on the new purchase = $566,500 less $10k deposit = $556,500 as the peak debt worse case scenario at the end of 6 months period Iden loan second RM behind BankC Option to refinance BankC at time of application (if opt to refinance BankC loan, customer would make no repayments during the Go-Between period) www.iden.com.au Correct as at Sept 12, subject to change without notice
- 12. Scenario (cont) Ensure the customer can service the end debt Customer has two properties = $950k in total value (400+550) Total debts (BankB + Iden loan) = $726,500 (170+556.5) Total LVR = 76.5% Existing property then sells for $400k minus $8k sales costs and $170k BankB loan = $222k Subtract the $222k from the Iden loan peak debt of $566,500 - this leaves end debt = $344,500 (assuming proceeds from sale takes the full 6 months) www.iden.com.au Correct as at Sept 12, subject to change without notice
- 13. Construction Loans Progress payments Principle & Interest or Interest Only 100% Offset Home Loan Lo Doc option available Fixed and variable rate options available from the outset www.iden.com.au Correct as at Sept 12, subject to change without notice
- 14. Construction Loans FHOG released upon land settlement Where the total building cost is greater than the loan amount, the funds the customer is contributing must be paid to the builder prior to the bank releasing any funds P&I Home Line available on the land loan component www.iden.com.au Correct as at Sept 12, subject to change without notice
- 15. Summary Go-between loans offer an affordable and simple way of bridging the buying and selling of your own home. This saves you having to 1) Sell first then 2) Move in to Rental then 3) Buy .then 4) Move in (two moves) Now you can A) Buy & Build B) Move in stress free when you want to C) Sell your old home easy (only 1 move) Construction loans help you with building your dream home, with loan repayments made progressively during construction. www.iden.com.au Correct as at Sept 12, subject to change without notice
Editor's Notes
- #2: This presentation is about the go-between and construction loans.
- #3: Firstly what is a go between loan. It is an easy way for an existing home owner to purchase the next home, be it an upsizing or downsizing, but at the same time allow for the orderly process of buying and settling the new home first, then making only one move into the new home, then selling the existing home.
- #4: Here is the details for you. The go between can be used with the following features. Principal & Interest, Interest Only, Fixed rates (from the outset!), Variable rates, No rate loading, 100% offset (from the outset!) and Lo Doc Loans
- #5: Repayments is measured to help the borrower with their objectives. We can lend the amount required to purchase or build a home without asking for increased loan repayments. Whilst in between, we will accumulate interest for an previously agreed period of time.
- #6: For an existing home, the loan will help purchase it outright, whilst you can then relocate into it and put your existing home on the market. You have options of leaving your existing loan as is, and continue to make repayments on it, or you can refinance the total loans required at the time of the application.
- #7: We can then allow the interest on the new loan to accumulate until you sell your existing property, and pay down the loan from the proceeds.
- #8: With a construction go between, the time allowed is 12 months due to the length of time it takes to build your new home.
- #9: Borrowing is limited to a combined total of 85% of both loans over both securities, which must include any capitalised mortgage insurance. It is easier if the loan amounts keep under 80% overall, as it eliminates the need for mortgage insurance. Total loan sizes of up to Equal to or greater than 80% LVR - $2.0M, Equal to or greater than 75% LVR - $3.0M, Equal to or greater than 70% LVR - $3.5M, Equal to or greater than 65% LVR - $5.0M, This is under full doc policy and applies to the go between as well (so that is based on the peak debt) For Lo doc Up to 60% LVR $2.0m (one security which for go between we would consider as such), 60% to 70% LVR $1.5m 70% to 76% LVR $1.0m, 76% to 80% LVR dependant on the insurers but can go up to a max $2.5m
- #10: LMI is required where the peak debt is > 80%. The LMI premium is based on the peak debt amount. Full valuations are required on both properties
- #11: You have 6 months to complete your go between purchase and sale. You can apply for an extension, otherwise after its expiry you will be required to pay for both loans.
- #12: Scenario for a go between. In this case we leave the existing BankC loan in place, and take as registered 2 nd mortgage.
- #13: The end result of the sale is the reduce the loan down to end debt of $344,500
- #14: Construction loans to assist with the building of a new home can be via any loan product. All of the loans provide for progress payments during construction of the home, so as to ensure that there is the cost to complete being retained for future payments to the builder.
- #15: Please note with the FHOG, the grant is released upon land settlement
- #16: In summary, our go between and construction loan accommodate particular customer needs and are perfect products for that special occasion.