Waiting, waiting, waiting..

I’m impatient, waiting annoys me.

We had waited weeks for the quotes from the builders to come in, of 4, 2 have so far quoted, and the trend is looking higher than we anticipated. Looking back, my estimates only included rough figures for removal, and raw material costs, so no labour, no other extras that invariably are required to do the job and do it right.

Once we got the two quotes, it became evident we need more funding, so we sought out our bank for an increase, to which they responded (no kidding, 100% serious), due to CPI increases, they can’t grant us any further credit as we don’t fit the banks lending criteria (in response to borrowing power).

So I ask, what is our borrowing power, and he replies – $149000. This, despite the fact he moments earlier stated we had a mortgage balance owing of $252000. The CBA is suggesting CPI has created this $100000 gap? Idiots. The house itself was recently appraised at $325000, so there’s plenty of room in the ‘resale value’ for any default to be recovered by the bank, and then some.

We had been waiting since Friday for the response ‘within 24 hours’ the online system said, so at this point, I wasn’t in the state of mind to sit and argue with him how absurd his suggestion that CPI is responsible for the $100000 gap in their lending criteria.

I did take a moment to remind him of our redraw balance, and indicated to him that the factual evidence shows the amount required to fulfill the renovations would easily be returned to the bank inside of 18 months to 2 and a half years.

He then proceeded to dribble some scripted garbage that the bank always use in CPI declined applications, and I responded is it your suggestion I take the mortgage, 2 credit cards, and 2 bank accounts to another bank? He told me not to.

Anyway, in the time since the call ended, my partner has been looking into it, and can see a big gap in the borrowing power suggested by CBA, and the borrowing power offered by BankWest, ING, NAB, Westpac and ANZ – all of which gave figures near our current mortgage rate.

The next step is to go in to the bank and see if we can’t talk some sense into them – they’ve got a good set of history data to go off, and crap, the money is going into the house they have mortgaged, it’s pretty secured.

If not, I think I’ll give up waiting, and go have a talk to another bank, I know we can tell CBA to jam it up their arse for $700, the downsides (or possibly upside) is we’d lose the wealth package we have with them, which offers a Credit Card for 55 days interest free, essentially shifting expenses by 55 days, giving us a better mortgage result (in theory, in practice that is probably different – the very card can actually increase your expenses).

This move by CBA is going to delay a lot. We need to get the exterior walls recladded for the solar power and solar hot water setup, we’ve already got both of those ready to go, with Solar Power due to arrange installation in around 4 weeks. The builder has given us a suggestive 6 week lead time, and 1 – 2 weeks to complete the work.

It’s now a matter of getting the dollars there to ensure we can pay the builder, else the whole concept is going to sit on the backburner, with the affected fibro sheets being replaced with new fibro instead (a stop gap measure until the funds fall in for cladding, a waste of money IMO).

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3 Responses to Waiting, waiting, waiting..

  1. OzCableguy says:

    Sounds like banks are getting cautious and, dare I say it, responsible again. Debt = bad so being knocked back on a loan because they think you’re getting a bit over committed may be saving you a whole world of extra pain if things ever go down the toilet for you.
    Back in the day when I worked for a certain bank we used to get people’s statements of assets with their loan applications and slash them silly because (a) people tend to grossly overestimate the value of their assets, and (b) stuff never gets anywhere near its proper value when you have to sell it fast .
    Each item had a different formula for the calculation. eg Cars would be marked down like 50%. I think real estate was only like 10 or 20% but they’d still never let you borrow more than around 80% of the property value without paying mortgage insurance (which incidentally only covers the bank’s shortfall and not yours if you’re ever sold up) but never more than 90% regardless.

  2. Cars, I could agree with, the moment it leaves the showroom it’s worth very little.

    Houses seem to be increasing in value (locally at least), but I also have not lost sight of the roller coaster that it can be.

    There’s a few plans of attack ready, and the worst case scenario is a forced sale (which is after ‘renting it out’ – the granny flat and house *should* draw enough of an income to ensure the mortgage payments with minimal added by us).

    The concept at the moment would be to increase value, through the key renovations, to:
    a) get more enjoyment out of the floor space.
    b) update the exterior
    c) increase value, so a forced sale should be speedy and get the best possible outcome.

    Specifically with C, the addition of solar power and solar hot water will realise savings, which in turn pays the mortgage down sooner, but the exterior walls need to be replaced, so that’s a forced expense – but, possibly a worth while one.

    One of the thing being done as part of the process is a valuation, which will focus on the current and theoretical future values, the increase in value needs to match the dollars input by +/- 10% to be viable in my opinion.

    The new internal layout is a no brainer though.

  3. OzCableguy says:

    Work out what the renovations will cost depending on how much it will increase the property value. Then compare that to how much you can sell it for as is now and how much a bigger home will cost you.

    For us, a block of land came up at the right price a couple of suburbs over in a higher growth area so it made a lot more sense to move than to extend the old joint. Mind you, the GFC happened almost exactly as soon as we moved so the last couple of years have been a major struggle but it’d pay off now if we chose to sell.

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