Construction Loan Despoit

Hi all,

Just after some advice on how much of a deposit is required to secure a construction loan.

I intend to complete a knock down/rebuild on a property that I will own outright.

At this stage the property is valued at around 1-1.2 million and once the knock down/rebuild is completed I would suggest the value will be closer to 1.7-1.8 million.

The total cost of knock down/rebuild will be around 650-700k & I will have around 100k deposit.

Will 100k deposit be enough or will I require 20% of the total construction value?

 

Generally they'll value it on the value of the land plus a fixed price building contract. If it's just one resi house, you won't need the full 20%, and equity in the land will count toward the LVR too.

For eg, if your vacant land will be worth $800k, and the build is $450k, they'll base the valuation on $1.25m and lend a percentage of that - you can go into LMI if need be, but your LVR will likely be much lower than this if you already own the property outright.

 

Will require the loan for the construction of the new dwelling after the knockdown.

 

Hi all. just a question.
If I want to build at the rear of my investment property which is 80%LVR.
do i just need 20% of all the cost to get contruction loan?
for eg: property with existing house value 600k (loan 480k).
Contruction cost for the rear unit is 200k. Do I only need 40k or more?
TIA

 

Depends. If the lender will lend you 80% of the fixed price building contract and all the values as stated and the end value is higher then probably yes.

 

No. The lender will lend up to 80% of their valuation once the construction is completed. They do an ‘as if conplete’ valuation once you have the fixed price building contract.
This end value will vary depending on whether it’s two on one title or if you have subdivided.

Many times the construction cost is roughly equivalent to ‘value’. But it’s also common for variance. Overcapitalising the build, a 5 bed house with 4 car garage and a jacuzzi on the roof in a suburb predominately made up of 3 bedders won’t value up.

 

2 as they'll be like unit 1 and unit 2

 

Is that considered to be 2 titles if there is going to be 2 units on a black (unit1 and unit2).
Whats beneficial in my scenario. (1 or 2 title)
land component is 685m2.
existing house 3bedroom 1 bathroom. old house, looking to renovate n adding extra bathroom and another bedroom.
& building another 4 bedroom 2/3 bathroom at the rear for positive cashflow.

wanted to build 3 but new gardening requirements is limiting the possibilities :-(

 

Not planning to sell them anytime soon. May bein 10-15 years time.

Seems like 2 titles are a lot better option just wondering why would someone be going for 1 title then?
Does 2 titles means more expenses and headaches to start with?
Thanx
Moses

 

Subdivision does cost money, and yes there’s a bit of paperwork and dealing with government departments and utilities.

You won’t get anymore rent subdividing. If your not going to sell and your not needing an increased val for borrowing then maybe you can avoid subdividing.