Background
The client owned a lifestyle property in a desirable rural coastal area and wished to purchase another lifestyle property in the same region. However, they needed time to prepare their current property for sale. To facilitate the purchase, they required an initial deposit to be paid now, with the remaining balance settled upon the completion of the new property purchase.
Challenge
- The main bank didn’t support capitalising the open bridge loan request.
- Funds were needed to cover the deposit for the new property purchase.
- The LVR was on the higher side, making it challenging for some specialist lenders to consider.
Mitigants
- The clients were strong applicants with an excellent credit score.
- They had solid incomes from a successful long-term business, demonstrating the ability to repay the residential loan either from the sale of the existing property or via Avanti’s long-term offering.
- The lifestyle property securities were well presented, with valuations used instead of Registered Valuations (RVs), which streamlined the process.
- The existing home was unencumbered, providing security for the deposit.
Solution
A two-stage solution was implemented:
First loan: Secured against the unencumbered existing home to facilitate the deposit.
Second loan: Secured against both the existing and new properties to enable settlement of the new purchase.
- Loan amount: $2,300,000
- Interest rate: 11.90% (fully capitalised loan)
- Avanti fee: $5,000
- Adviser fee: $5,000
- LVR: 72% end LVR after caping
Rates and fees were valid at the drawdown of the specific loan facility in each case study. New loans are subject to the rate at application. A copy of our current rates and fees can be found here.