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  1. #1
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    Default WWYD - buying first house

    Hi all!

    Just a what would you do post - DH and I have seen a house that we have absolutely fallen in love with - location, price and facilities are more than we could hope for.

    That only problem is that we are about 12 months away from having our deposit/stamp duty/legal fees ready.

    The mortgage would be almost exactly the same amount as we pay in rent and we have enough to pay rates/water/insurances it's just the lump some payment we don't have upfront yet.

    The other issue is DH has a default on his credit file that is paid and coming off in September this year.

    The house has already been on the market for more than 3 months.

    Would you ask for a loan from a family member for the deposit and fees - but how would we sign a contract before being able to apply for a home loan until September? Can we sign contract subject to finance without per approval from the bank?

    Or would you ask a family member to purchase it as an investment for 12 months when you have your money available (whilst paying the mortgage repayments)

    Or hope that the house is still available when you're ready?

    Any other suggestions?

  2. #2
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    If I fell in love with our dream home and it was up for sale I'd try all of those things in order to secure it! I'd probably do whatever it takes, a loan from a family member might be the first thing I'd do though.

    You get your property!

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    Signing a contract without finance is very risky. Start talking to banks and see what they'll do in terms of pre-approval, ask family for loan and negotiate the price down. If it's been on market for 3 months they should be open to dropping 5-10k off it at least depending on price.

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    Also, you can't sign subject to finance but you can make an offer subject to finance. However if there are other buyers sniffing around and you start making offers you want to be ready to buy because the agent will use your first low offer to push any other buyers into action.

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    You can sign a contract subject to finance, but you have a time period to have the finance sorted. We had a pre approval for the house we just bought and signed the contract subject to finance, but we only had 2 weeks to have the finance fully organised - so bank valuation etc done. Also, make sure that if you get a loan for deposit etc that the bank will accept that. They can be funny with borrowing deposits from family etc.

  6. #6
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    I would never do that - far too risky. There will be other houses...

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    A few other creative options that you could try, that totally depend on the urgency the seller has to sell...

    1) A contract with a 12 month settlement period. If they are in no hurry and just want their price, you could offer the full amount, but with a long settlement. That gives you plenty of time to get your strategies in place so that when settlement comes you have the money saved, or an alternative strategy in place as the sale would be unconditional - so no get out clause down the track.

    2) Take an option on the property. This is a legal contract where you pay an option fee to purchase the property at a later date for a fixed sum. So if you think the house is going to be worth the same or more in 12 months - you could put down a $5000 option to purchase at the sale price in 12 months. The beauty with an option is that if you change your mind or things don't work out, you can get out of the deal, but you lose your option fee - the sellers keep that. But if you do want the property it is yours at a fixed price on a fixed date.

    3) A rent to buy option - again, this depends if the seller needs the money out of their property now or not - but you could enter into a rent to buy type of agreement where you move into the house now and rent from the owners - with a legal contract in place that you purchase the property from them at a certain date in the future. In these type of cases the rent is usually higher and either a percentage goes to the owners as a part payment against the deposit or you take over the payments of rates, insurance etc as goodwill for the ability to be in your dream house and settle at a later date. All the points are open to negotiation between you and the buyer and you tie it all up legally.

    These are all completely legal and your solicitor can organise it for you - but they do depend on the buyer being happy to wait a year - which some are - it just depends on their circumstances.

    Good luck with it!

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    If it were my dream house, I would probably attempt to get finance, and if that meant borrowing for a short period from a family member, then I would. No way would I make an offer subject to finance if I was not 100% certain I could actually get finance though.

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    Have you had your finance approved? If it were me I would make sure my finance is approved and then borrow the deposit and fees ( obviously you would have to be able to cover the mortgage and pay back your family for the deposit)
    I wouldn't bother with extended settlements and rent backs as anything could happen in 12 months and most owners would not even consider it - as a buyer struggling to get finance is not a risk most people would take - as pp said there are other houses and unless you can get this one a lot cheaper and you already have your loan approved id let it go

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    Have you talked to your bank? That's where I would start.


 

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