Can Driveway Excavation be included in Construction Loan

Discussion in 'Loans & Mortgage Brokers' started by Carol M, 20th May, 2020.

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  1. Carol M

    Carol M Well-Known Member

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    Hi,
    Helping daughter buy first home.
    Need to know if lenders (probably CBA) will allow Driveway Excavation cost to be included in Construction Loan (approx. $30,000 just to create it with gravel on top, on a sloping site).
    Could this be included under builders contract, or even with an additional 2nd contract with Excavator (do lenders permit multiple contracts within a Construction Loan?).
    Thanks
     
  2. Morgs

    Morgs Well-Known Member Business Member

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    Should be able to include. Just make sure you've got a quote or invoice signed by a licenced trade which includes the details.
     
    Lindsay_W likes this.
  3. Lindsay_W

    Lindsay_W Well-Known Member

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    Thought your Daughter already had a PPOR? Or different daughter? (reason I mention is some states offer rebates for building first home)
    If it's either in the total contracted price or a separate quote it can be financed, if the builder hasn't included driveways in their contract/quote I would suggest you find a better builder, some are just rip offs and don't finish the house, but often comes down to price and quality.
     
    Last edited: 20th May, 2020
  4. Carol M

    Carol M Well-Known Member

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    Thanks, we have 2 daughters.
    This one is on a very low income, and even with FHOG is probably better off buying an investment property with a good rental return, just to get started. That was how we got her sister's first property when she had an equally low income. She now has 3 properties, and looking at her 4th.
    Meanwhile, Investment looks to be best option again. Sometimes it just works out better that way. Apparently as long as you have not lived in a home, then it does not count towards FHOG. So she could apply for that later for a PPOR.
     
  5. Lindsay_W

    Lindsay_W Well-Known Member

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    If that is the case then i would suggest looking at existing housing stock > brand new house and land, the rental return % is often better and older blocks generally have a larger land portion. LVR for investment is usually lower too, 90% max in most cases
     
  6. Carol M

    Carol M Well-Known Member

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    Yes, normally existing house may be more affordable, but not always the case. In this particular area a small modest house on a very large block can be built for way less than a similar old shack. And if she can't build, she may even sit on the land for a few years. Anyway, we are of course looking at all options. There are still lots of cashed up buyers around (in outer Melbourne classy area) which makes it hard. And yes, it has to be that area - girls are fussy. Thanks.
     
    Last edited: 21st May, 2020
  7. Lindsay_W

    Lindsay_W Well-Known Member

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    Really? What suburb?

    Insisting on a particular area is not a good mindset when looking for investment IMO
     
  8. Carol M

    Carol M Well-Known Member

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    Prefer not to say which suburb. She is flexible but wants somewhere around Dandenongs/Yarra ranges/valley, which do have some nice large lots, often sloping, and often with high bushfire rating etc. So lots of due diligence required, but that is what builders and town planners are for. Hoping prices on old shacks will fall a bit more over next 6 months, but not counting on this, as there is still so much activity. Our goal is not to get a good investment, but to get her into the market, ideally some place she can eventually live. And I reckon anywhere within an hour drive of Melbourne CBD is a good investment, IF the price is right and you don't overcapitalize in a falling market.
     
  9. Carol M

    Carol M Well-Known Member

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    I thought that would be obvious. Other investors follow these threads, and am looking at a few good buys in certain areas. Re building - it really depends on cost of build, which can vary quite a lot. Never said would be buying a bad investment, just that a good investment is not top criteria. And again, anywhere within an hour of Melbourne where numbers stack up is probably OK long term. I would certainly avoid shoe-box size lots in new estates, but they may work for some people. Anyway, thanks for your advice.
     
  10. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Driveways, AC and other add ons may push the LVR out. A driveway doesnt add value as much as a lack of driveway drops value. eg You can get a builder to price up a "walk in" completion with blinds, AC, driveways and the whole landscape etc. But the cost will be more than a base build. Then the lender may look at the LVR and it comes short. So you then need to find 100%.
     
  11. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

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    It can definitely be done, my own home is proof of this.

    It is interesting that a lot of builds don't include driveway and fencing, I've had quite a few clients come back for a 'top up' later on for these items.

    In my own case, the fencing and landscaping were separate items (we set aside 20% cash for quite a few things, it makes a huge difference).

    The drive way had to be included in the build as the block slopes down (steeply) into the garage. Special culverts were engineered into the design, which needed specific council approval. The driveway was an integral part of the build almost from the beginning.
     
    Last edited: 21st May, 2020
  12. Lindsay_W

    Lindsay_W Well-Known Member

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    By the sounds of I don't reckon you're buying in highly sought after areas, a suburb is not going to give away the property you're looking at.
    Why the 'Must buy now' mentality? Sounds like your daughter would be well advised to wait, save more deposit and buy something that going to be decent when she has more solid deposit and income. The old saying "fools rush in"...
     
    Last edited: 21st May, 2020
  13. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Go Karen. Boomer...yeah I know you used sheets not curtains.