Take a fresh look at your lifestyle.

Public Search In Second Due Diligence Mortgage Transactions

Loan serviceability is the first matter you need to decide when considering a loan application. Other matters are property and market investigations, details of first ranking security and public services. This short article covers public searches. 

Public Searches    

You need to conduct some legal searches while conducting a second due diligence mortgage. You should obtain the following information from the borrower:

  • Full name of the borrower (ACN/ABN)
  • Copies of ID (passport and driver’s license)
  • Copy of trust deed
  • Copy of variation documents pertaining to trusts
  • When the borrower’s ABN and ACN don’t match, this means the borrower acts as trust’s trustee.
  • Latest land tax and other notices for the property.

In case the borrower is a superannuation fund, being a lender, you should be familiar with the prerequisites and capacity of superannuation funds. 

Super funds cannot own or acquire property with members residing in. Make sure that property ownership serves business purposes only. 

Make sure that the project is within the business strategy of the super funds. If it is a highly speculative project, it may fail to qualify.

You should be able to conduct a variety of legal searches. The following are the additional searches you should carry out:

Town Planning and Building

Conduct these searches to confirm property restrictions and approvals.

Infrastructure, Transport and Energy

These searches confirm if there is any infrastructure or proposed resumptions that can affect the property.

Contaminated Land

You need to confirm that the property is not on contaminated land. Learn about existing prior environmental activities.

You should also ask for a copy of the contract if the funding has something to do with the purchase of the property. You need this copy to confirm:

  • The sum that the borrower needs. This also includes applicable rebates.
  • If the borrower is buying the property. 
  • Specific terms of the transaction that can affect your terms of approval.

A Checklist

Serviceability

  • Ask the borrower to provide income and depth evidence.

Market and Property Investigation

  • Get information about the existing and future infrastructure projects and other developments.
  • Independent property and market valuation

Security investigations for 1st mortgage

  • Get the current balance statement
  • Obtain copies of documents

Public searches

Conduct all the public searches covered in this article.Mortgage due diligence is not easy. This is the reason why most lenders rely on a team that possesses aligned experience and expertise. Find one such team for you.