Banks not giving loan for student apartment

smith1286 on 01/03/2019 - 10:16

Hi All,

I am looking for your expert advice on my current situation.

I inspected an Student Apartment last weekend and made an offer ( Deposited $1000).
The agent accepted our offer and then we contacted banks for loan. When we contacted banks we came to know that no bank gives loan for student apartment.
Now we are stuck as settlement date is quiet close . We spoke to real state agent and he said you should have done this research earlier before making offer.
If you void contract of sale now you have to face the consequences.

I am wondering if anyone can advice me what shall I do now. Also, If i void contract now how much maximum patently I have to pay.

Thanks,
Smith

Financial

Comments

  • [Deactivated] on 01/03/2019 - 10:17
    +59

    Troll or just no research whatsoever?

    Did you sign subject to finance?

    They only accepted $1000 deposit?

    • Baysew on 01/03/2019 - 10:22
      +25

      OP has done some research, see - I Need Financial Advice.

      Although the general consensus was that the OP should not buy investment property just to save on Tax and concentrate on paying down existing loan.

        • [Deactivated] on 01/03/2019 - 10:38
          +36

          Then reword the post to asking for a friend. Do not use the word I.

          • [Deactivated] on 02/03/2019 - 11:27
            +11

            @[Deactivated]: It's really difficult to find friends these days who don't screw up and end on ozb posts..

        • onetwothreefour on 01/03/2019 - 10:45
          +26

          Ah why is it always the "friend".

          I guess the short answer to your question is find someone to lend you (your friend) the money or lose your (friend's) $1000 or more depending on the agreement you (your friend) signed.

          • pegaxs on 01/03/2019 - 10:59
            +25

            @onetwothreefour: “A friend of mine” is the default setting for silly mistakes people make without doing research…

            Doesn’t matter, OP can’t win. OP says “I” And everyone berates them for bad decision. OP says “friend of mine”, everyone calls out “friend” and then goes on to berate OP for making a silly decision.

            • Parentheses on 01/03/2019 - 19:15
              +3

              @pegaxs: OP could have won by not making stupid financial decisions, it's way too late now.

        • Randxyz123 on 01/03/2019 - 10:57
          +10

          lol Bullshit mate. You stuffed up. Admit it.

        • holdenmg on 01/03/2019 - 11:59
          +6

          Why don't you lend the friend the money then…

          • T1OOO on 01/03/2019 - 23:11
            +2

            @holdenmg: Bloody hell! Post if the year so far!!

            If I’ve ever seen a CHECKMATE to a stupid lie of a story.

            Bravo!

        • herecomestheoost on 01/03/2019 - 15:04

          Yes please.

        • burningrage on 01/03/2019 - 20:22

          Lol!

  • bobbified on 01/03/2019 - 10:22
    +18

    We spoke to real state agent and he said you should have done this research earlier before making offer.

    Here's a real estate agent who speaks the truth!

    Also, If i void contract now how much maximum patently I have to pay.

    That contract you signed will have all the information you need. If your contract is conditional on you being able to obtain finance, your losses should be limited. If the contract is "unconditional", you're pretty screwed and likely to be up for much more than just your $1,000 deposit.

  • kolorijo on 01/03/2019 - 10:30
    +4

    How come there is no solicitor involved?

    • [Deactivated] on 01/03/2019 - 10:35
      +1

      Why would there be?

      • [Deactivated] on 01/03/2019 - 10:39
        +6

        Well at least a conveyancer.

        • kolorijo on 01/03/2019 - 10:48
          +1

          or this ^

          to advise or give recommendation to OP on their purchase

          • [Deactivated] on 01/03/2019 - 12:13
            +10

            @kolorijo: You don't need a conveyancer to tell you

            "Do not make an unconditional offer if you do not have the cash ready."

            • kolorijo on 01/03/2019 - 13:14
              +23

              @[Deactivated]:

              You don't need a conveyancer to tell you

              OP does :D

              • [Deactivated] on 01/03/2019 - 13:30
                +3

                @kolorijo: Awww snap.

  • mbck on 01/03/2019 - 10:33
    +3

    Student apartments? Yes high rent, but poor capital gain if any. Plus the number of repairs required…

    • c0balt on 01/03/2019 - 15:11
      -1

      Be selective about the tenant and it's smooth sailing.

      Almost as good as having commercial property where it's the tenant who takes on most the responsibilities.

      • PopCounty on 01/03/2019 - 15:13
        +8

        *smith sailing

        • c0balt on 01/03/2019 - 15:14
          +3

          I would steer clear of Smiths, and rather look for Wongs as a tenant to maximise income to repair ratio :P

  • [Deactivated] on 01/03/2019 - 10:34
    +9

    You'll be up for whatever amount you agreed to as deposit. Not just the holding amount. This may be upwards of 10%.

    If you didn't sign subject to finance (or similar caveats) and/or cool down period has expired, you have no recourse.

    • toristo on 01/03/2019 - 10:41
      +4

      Which loosely translates into "talk to a lawyer very quickly".

      Don't cheap out now - you've potentially made an expensive mistake an investment of another $500 for a meeting might be worthwhile to save you thousands.

      • [Deactivated] on 01/03/2019 - 10:48

        I'd talk to a lawyer, even if it is to hear what I already know.

        The contract is likely to be a standard one which if no caveats were placed, there is no room to wiggle.

  • Sofie519 on 01/03/2019 - 10:42
    +2

    What is the total size of the accommodation. Some lenders may look at it, private lenders will also consider, but your rates and LVR won't be what you probably anticipated due to higher risk associated with these investments.

    Alternatively if you have another property with equity, there are options to secure the finance against another property.

    Everyones circumstances differ, I would suggest for you to speak with a broker.

    If you placed $1000 holding deposit and the are no subject to finance clause, then you will lose that $1000. If cooling off period is over, you stand to lose 10% so act quickly.

  • HighAndDry on 01/03/2019 - 10:57
    +36

    Let me get this straight, you signed a contract to buy a property without making sure first that you could afford it?

    • ykwon10 on 01/03/2019 - 10:58

      on face value yes!

        • Randxyz123 on 01/03/2019 - 11:04
          +8

          Have you spoken to a broker about a personal loan?

        • ykwon10 on 01/03/2019 - 11:07
          +8

          You can perhaps withdraw equity from your current PPOR to pay for your investment property then.

        • [Deactivated] on 01/03/2019 - 11:08
          +51

          So is it you or a friend? I'm confused 😕

          • bobbified on 01/03/2019 - 11:32
            +13

            @[Deactivated]:

            So is it you or a friend? I'm confused 😕

            I'm actually laughing - it's like you're chasing OP down calling him out for bs'ing about it being for a "friend"! haha 🤣

          • pegaxs on 01/03/2019 - 22:44
            +3

            @[Deactivated]:

            I'm confused

            Come on mate… been a member since 2009… you’re not confused 🤣😂🤣 This is OzBargain meme 101 stuff.

        • kolorijo on 01/03/2019 - 11:33

          get help from families?

        • HighAndDry on 01/03/2019 - 11:45
          +6

          That's over 90% LVR, for a non standard property, in the wake of the Royal Commission….

          Go to a mortgage broker and/or see if you can find a small/private lender. Expect to pay exorbitantly though so consider whether just walking away might be a better option.

          • ssyl9 on 01/03/2019 - 14:58
            +1

            @HighAndDry: yea 5 years ago OP would have gotten the money no problem

            But now after the Royal Commission its next to impossible to get loans above certain LVR

            • infinite on 03/03/2019 - 11:19

              @ssyl9: Even 15 years ago OP wouldn't have been given the money without ponying up 20% pluse of the purchase price as established savings, then with a shit-tonne of additional conditions on top. Even at that point it would be a slim chance of approval & would require a number of internal reviews and authorisations from credit managers to state/national LM's.

        • Hithere on 01/03/2019 - 15:07
          +1

          Obviously the words "Due diligence" don't ring a bell then OP?

        • No ONE on 01/03/2019 - 20:21
          +1

          I just though I would borrow from bank

          Earlier you said it was for a friend!
          Total troll!

        • Jugganautx on 02/03/2019 - 06:04

          Hahahahahaha yeah because theyll just lend to you out of sheer goodness of their hearts.

        • bs0 on 02/03/2019 - 09:47
          +3

          Where do you find a 110k apartment?

          • brendanm on 02/03/2019 - 20:32

            @bs0: It's student accommodation, basically a glorified shoebox.

          • abuch47 on 02/03/2019 - 20:59

            @bs0: Student apartment means your bedroom is your kitchen, living room and laundry with a separate bathroom.

            • AlexF on 03/03/2019 - 10:19

              @abuch47: Foreign (particularly, Chinese) student demand is projected to drop, The Age. Given Australia is becoming a technological backwater, that’s expected. Local demand will likely fall too.
              Failure to get a loan might be a blessing in disguise.

              • abuch47 on 03/03/2019 - 11:07

                @AlexF: Yes definitely might stand to lose more buying an apartment (especially student) than having to pay costs for breach of contract. Best thing would be to still pay for it and onsell immediately, or rent out as investment till the market picks back up (10 years minimum id say)

              • Ughhh on 03/03/2019 - 11:39

                @AlexF: I don't think it'll drop much. (Chinese) Students come to Australia for hopes of getting PR, a better lifestyle and culture. Uni is just one of the paths to get it.

  • Ocker on 01/03/2019 - 11:04
    +14

    Most banks will not lend on apartment of less than 50sqmt.

    • Ash SA on 02/03/2019 - 07:15

      Some private lenders do provide mortgage for properties below 50sqm BUT LVR is max 50%. No question of going beyond whatever the case.

  • forrester on 01/03/2019 - 11:09
    +17

    Sounds like your wife will be livid as your wording suggests that you yourself made the offer.
    I wouldn't be surprised if she hasn't already skinned you alive, especially as she is now 30+ weeks pregnant o_O

    • Seedy seed on 01/03/2019 - 11:54
      +9

      My god people on here are super stalky…

  • nomoneynoproblems on 01/03/2019 - 11:51
    +7

    Obvious troll thread. You guys just took the bait.

    • Antikythera on 02/03/2019 - 13:23
      +5

      i only intended to take 1% of the bait. but it seems i'm now going to have to take much more of it, possibly as high as 20%, because I didn't seek prior advice. what are my options going forward?

  • [Deactivated] on 01/03/2019 - 13:08

    this guys a troll

    read his past threads

    • Seraphin7 on 01/03/2019 - 13:50
      +11

      Some people just can't adult.

      • Ughhh on 01/03/2019 - 18:05
        +19

        With this attitude and carelessness, you're going to be in shit situations all the time.

  • chumlee on 01/03/2019 - 13:15

    Use equity in PPOR if it applies to you or go to a non bank lender such as Liberty Financial or Pepper Money

  • GangGang on 01/03/2019 - 14:07
    +8

    This is why I always say, go to the bank & get pre-approved first. I always get slated for it & get told: "pre-approval means nothing". Well at least you will know if you get rejected or not before even looking for a place.

      • SydStrand on 03/03/2019 - 15:44
        +3

        Apparently not!

    • Krankite on 04/03/2019 - 11:21

      Pre-approval is like Facebook RSVP's, only the No's actually mean anything. The most important part of pre-approval is the part where they tell you to include subject to finance in the contract. Which OP's second cousin twice removed must have missed.

  • [Deactivated] on 01/03/2019 - 14:14
    +5

    You are pretty screwed.

    For future reference it is pretty much standard practice to obtain pre approval before you put an offer in, and then you make that offer subject to finance.

    Do you have someone who can guarantor the loan for you? You should tell the agent ASAP if you can't buy it, this may help limit your liability.

  • pantsparty on 01/03/2019 - 14:54

    What does the contract say will happen if you don't meet your obligations? I think you should speak to your legal adviser.

  • Trying2SaveABuck on 01/03/2019 - 15:36
    +1

    Dont feed the Trolls

    • kolorijo on 01/03/2019 - 16:30

      with Pastry

    • Imhereforcomments on 01/03/2019 - 19:39

      I haven't combed my troll for years and haven't fed them too.

  • andyken on 01/03/2019 - 18:07

    take the picture of the contract and the condition

  • whooah1979 on 01/03/2019 - 18:45
    +3

    Pack up and go home. Come back next semester for a fresh start.

  • pork chop on 01/03/2019 - 19:44
    +2

    student apartments? - dont walk…RUN Away!

    I previously owned a student apartment. My advice to you is to spend your $$ elsewhere. Period.

    • BartholemewH on 01/03/2019 - 20:12
      +6

      What was the killer? Body Corp fees? Repairs? Occupancy?

      • jacross on 02/03/2019 - 08:56

        I'm also curious

        • pork chop on 05/03/2019 - 19:47

          Sorry folks I totally forgot about this post!

          In my case, the building of my apartment is only 'council approved' for 'student accommodation'. This restricts me from renting my apartment to non-student tenants which generates higher rental returns. To process to change this Student Accommodation classification costs alot of money in legal fees etc….and it's subject to things like whether the building has sufficient parking spaces for every apartments. This can be difficult to comply if there's simply not enough parking in the building to cater for every apartment in a non-student accommodation building.

          Student accommodations are generally managed by an onsite 'property manager' to manage all apartments. Typically, the property manager runs it as as a business so you signed a long term rental guarantee lease to them and they let out your apartments at whatever cost they set. The attraction here is that you are getting a rental guarantee for X years but it's a below market returns.

          Student accommodations get trashed, the building AND apartments are poorly maintained. You have no control who your tenants are. Maintenance bills run high and banks dont like lending to student accommodations loans.

          Glad I sold mine after some years of putting up with the cost of fees and legal costs.

      • SydStrand on 03/03/2019 - 16:10

        My parents owned and rented out a house near UQ campus that they've since sold, and the problem was tenants.

        Students don't stick around for more a couple years, so there's less sense of ownership and responsibility (also need to constantly vet new tenants); some will also treat the property like a frat house so expect more than the usual wear and tear. Students also don't have much money, so don't expect to make too much, which on top of the money my parents had to spend on repairs, paint, etc., was hardly worth the effort.

        If you own a CBD apartment and intend to rent out to international students, they will also sublet to hell. Just look at Gumtree or Flatmates ads, you'll find some advertising living rooms for rent.

  • itsdougie on 01/03/2019 - 19:55

    There is a really good loan shark on gumtree that can help you

  • burningrage on 01/03/2019 - 20:44
    +2

    Your PPPR repayment is 40% of your after tax income. Another $110k loan will add about 20% to 25% to your repayment bringing this to about more or less about 60%.

    Your disposable income before living costs would be about $3,000 or less per month. You are about to have a baby in 2 months or so.

    I would say you can't afford this apartment unless you intend to live on instant noodles every day.

    Good luck OP. Even Warren Buffet wouldnt know what to do in this circumstances.

  • Jumpingmanjim on 01/03/2019 - 20:55
    +12

    Thanks OP, now I feel better about my own financial situation.

  • [Deactivated] on 02/03/2019 - 01:18

    You should have done this research earlier before making offer.

    And yeah, my name is Mr Smith too.

    • Ash SA on 02/03/2019 - 07:18
      +4

      No. Your name must be Mr. Walker if I am not wrong.

  • keejoonc on 02/03/2019 - 08:35
    +5

    unbelievable to think that someone would go out and make an offer to buy something without knowing for sure they can afford it.

  • Zonty on 02/03/2019 - 08:48

    My advice go morgage broker and some finance company give loan if you have minimum % deposit like 40% with Low doc. Ask Low doc loan. Hope u got that much% deposit otherwise u need pay may be legal cost and, Cross finger seller sale property faster with same price or higher price asap. Otherwise you will also paying different and interest etc.

  • burningrage on 02/03/2019 - 09:49

    One of the things that people need to remember is that at such highly geared position you are at the mercy of your job to either keep paying you that much OR you still have a job. You won't even be able to reduce your loan meaningfully.

    If you lose your job or even have a slightest pay cut, your std of living will be exponentially exposed.

    The only prudent way to limit the damage is to sell the apartment immediately before settlement (but dont draw your card out lest people will press down price further) OR you negotiate exit of contract.

  • [Deactivated] on 02/03/2019 - 09:50
    +1

    Should have invested the money into some English and basic finance lessons instead. Besides clear communication with others, the former will help with the understanding of any contracts you may sign.

    • smith1286 on 05/03/2019 - 00:03
      -1

      you should have commented in England or USA forum. Even you should have lived in USA or England. There you would find people with perfect english.

      Stop telling People about their english. I really appreciate effort you have made to born in english country or english family.

      • [Deactivated] on 05/03/2019 - 08:23
        -1

        I will comment where and how I like. Your second paragraph doesn't even make any sense. Lack of English comprehension is going to make it hard for you to navigate the complex world of real estate and finance, a good example being what has happened so far.

  • vicosads on 02/03/2019 - 10:10
    +2

    what kind of idiot doesn't have finance sorted beforehand and has subject to finance clause, must be a troll

    • drprox on 02/03/2019 - 10:31
      +1

      Only reason I assume not a troll is because the post is otherwise so mundane! I mean I'd be trolling harder.

  • drprox on 02/03/2019 - 10:30
    +1

    Tell your mate to look at private lenders. Someone will do the loan just not a bank.

  • Milk tea on 02/03/2019 - 14:11

    So is it subject to finance or not?

  • Milk tea on 02/03/2019 - 14:15
    +1

    In your previous post you stated this:
    My Current Situation:

    Earning $7000 monthly (After Tax 7k) .(Single income)
    Bought a house in March 2018.
    Borrowed 520k from bank and paying 2800 monthly ( Loan is for 25 years. 3.99% interest)
    Expecting a baby in May 2019 ( Wife not working currently)

    I'm so confused with your situation lol

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