My partner and I have been looking for a lifestyle block. We finally found two blocks: one with 42 acres and the other with 75 acres and we are planning to buy one of them.
We are selling two existing urban house to pay for this purchase and we have just over 20% equity. But the bank is saying both LSBs are "uneconomic unit (or sub-economic unit) and therefore would require equity of 30% and upwards.
We would appreciate if you could offer any advice to overcome this.
are you applying to the right type of mortgage? if you only want a lifestyle block to mow large lawns, why would it have to be considered differently from a town house mortgage?
buying blocks of land over a certain size, 5 acres or more perhaps, are quite different in their deposit requirements from a town house and a 20-30% is required.
Then if you are self employed, you also need this amount of deposit, buying land or in the city
have you considered renting out the two urban houses and buying the block? That way you are a mixed borrower to the bank and they like houses to lend against.
Have you got a plan to what you want to do with or 75 acres? It might help your case with the bank if you did a budget as to what sort of income you intend to make from it.
There are plenty of economic things you could do with that acreage.
Horticulture, kennels, dairy grazing, perhaps even alpacas or grazing horses-not to mention the usual sheep and cattle as long as you went for high end stuff-not every day crossbreds! Might take awhile to make a profit, but if the intention is there then go for it!
Sue
Labrador lover for yonks, breeder of pedigree Murray Grey cattle for almost as long, and passionate poultry person for more years than I care to count.
all those above suggestions are good, but banks are quite careful about the percentage of deposit required for the kind of land you are buying and tend not to budge on it. That after all is how things in america went awry, lending 100% for homes.
So a 30% deposit will still be required irrespective of what you are going to do with the land, I would imagine
Hi Mo. Have you tried the Cooperative Bank? I've dealt with them for years (from when they were formerly the PSIS) and, from experience, find them absolutely brilliant! I think they really live their name. Plus, they've just started giving their 'owners/shareholders' (i.e. their clients) a dividend back on profits. [:0]
Not sure if you're looking at your block as a business or lifestyle, but in any event they also provide small business finance so if you haven't considered them yet, it might be worth having a chat. Here's their website: www.co-operativebank.co.nz
All the best.
Cheers, Mich.
Good exercise for the heart is to bend down and help someone up. Anon.
One of the local properties that was recently up for auction with an older style home fully renovated had 3 interested parties ready to sign the line.
However Banks are no longer lending on properties that do not have council approval and code of compliance for completed projects and this property had to be passed in until the owner sorted the matter out with our council.
I am told by the Agent that initial advice from council was that the property (ie septic) would have to be brought up to today's building specs before council would issue a CoC.
swaggie;469889 wrote: One of the local properties that was recently up for auction with an older style home fully renovated had 3 interested parties ready to sign the line.
However Banks are no longer lending on properties that do not have council approval and code of compliance for completed projects and this property had to be passed in until the owner sorted the matter out with our council.
Swaggie, thats not entirely true, it depends on the degree of non compliance.
A septic not up to standard makes the dwelling unihabitable
Not every sale has a LIM report either and the bank doesnt necessarily ask for one
The case you quoted is a specific non compliance but the old shed out the back without a permit would not prevent the bank lending money
swaggie;469889 wrote: One of the local properties that was recently up for auction with an older style home fully renovated had 3 interested parties ready to sign the line.
However Banks are no longer lending on properties that do not have council approval and code of compliance for completed projects and this property had to be passed in until the owner sorted the matter out with our council.
Swaggie, thats not entirely true, it depends on the degree of non compliance.
A septic not up to standard makes the dwelling unihabitable
Not every sale has a LIM report either and the bank doesnt necessarily ask for one
The case you quoted is a specific non compliance but the old shed out the back without a permit would not prevent the bank lending money
Yes Muri it was certainly so for this property, the house had no record of Council approval or CoC, we all thought perhaps the records had been destroyed in the Raglan Council fire when our area used to come under Raglan Council, but in this case those records had not been touched.
All three parties had to borrow to be able to purchase the property, and all were in the same boat!
We went through this last year and had the same scenario, over 20% but not 30% on a 70acre block, we got approval in the end but it was nerve wracking there for awhile!
We used a broker who got OUR bank to approve it when we could not. Roost Mortgages.
In the end we didn't even end up buying it and bought 11 acres instead, but went through many goes at buying various properties outside the banks LSB boundaries.
] Blueberry
Plus, they've just started giving their 'owners/shareholders' (i.e. their clients) a dividend back on profits. [:0] 