Buying a build land without money is more of a necessity. A need that many singles or young couples have who find themselves in the situation of wanting to buy a home in which to live, but cannot realize their dream due to lack of the minimum advance required when applying for a mortgage or second mortgage.
In the process of taking a loan or applying for a caveat loan in Australia, Loanspal.com.au is helping a lot. They examine all the possible alternatives to buy a property without necessarily having a significant capital available, evaluating each of these the relative advantages and disadvantages.
Before addressing the issue of 100% mortgages and alternative solutions to buy a build land with little money, let’s see why banks tend to finance sums of up to 80% of the value of the home.
Usually, in the face of an economic commitment by the buyer, who is asked to advance at least 20% of the property’s purchase price, the bank is available to finance the missing amount through a mortgage loan. The reason why banking institutions do not grant an amount exceeding 80% of the property value is linked to the fact that they cannot afford a financial risk if the borrower does not pay the loan. In fact, in the event of insolvency, the bank would find a property to resell without recovering the sums invested or even would have an economic loss, considering that the eventual auctioning of the property would require a substantial lowering of the value of the property, in addition to the countless costs and interests that the institution should bear.
As mentioned, it is mainly young couples and those under 30 who are the most penalized in the credit market. Often, the lack of a stable job has not allowed these categories of people to save enough money to meet the initial expense necessary to complete the sale of a build land, which, as we have seen, usually must be at least equal to 20% of the cost of the property.
Hence the need to obtain a 100% mortgage allows you to be financed by a bank for the entire value of the build land, even without money (or almost).
Naturally, the buyer must have the minimum availability to bear the initial purchase costs, such as the notary’s fee, who in the presence of a mortgage will have to draw up two notarial deeds, so in addition to the act of sale, the loan deed, and a series of other expenses, including registration tax or VAT, bank costs and any commission from the real estate agency.
At certain times, several banks promote 100% mortgages, specially dedicated to young couples who need to be financed until the full price of the build land is reached. With the necessary insurance protections, a 100% mortgage can be granted at around 2% for up to 30 years.
Compared to the best mortgages of the moment, with rates well below 1%, even for long-term maturities, those who propose a 100% mortgage apply, as is reasonable, higher interest rates than those who ask for a loan with LTV (Loan to value) of less than 80%. However, it must still be said that these conditions remain favourable.
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