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Finance for Splitter Project

Discussion in 'Property Finance' started by bonanzawealth, 7th Oct, 2015.

  1. bonanzawealth

    bonanzawealth Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    58
    Location:
    Sydney NSW
    I'm thinking of purchasing a larger block say 1000sqm with house on the front then split it, sell the vacant land and retain the block with house on it and rent it out.

    The LVR will be 88% when purchasing the original block with house. Do I need to let the bank know that I'm purchasing with intention to split it and sell the vacant land?

    After selling the vacant land, can I then refinance from the larger block to the smaller block with the house on it OR do I need to reapply the loan since it's different RP number?

    any advise will be much appreciated. Thank you
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,595
    Location:
    Adelaide, SA
    Hiya

    What I did with mine was:
    - buy block at 88% lvr
    - pay for subdivision costs myself (from existing equity) to split it in half, creating 2 torrens titles
    - had the 2 new blocks revalued and refinanced

    Instead of step 3 you could sell either and keep other (revalue and refi the one you keep)
     
  3. SK Investments

    SK Investments Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    174
    Location:
    Wherever the wind takes me, currently Brisbane
    Hi D.T,

    Which lender did you get finance through and were there any problems with them when it came to getting titles? What lvr did you get on the refinance?

    Cheers.
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,595
    Location:
    Adelaide, SA
    Hiya

    I mentioned in the Dev thread.
    1) Was 88 lvr with CBA for the block
    2) Then 84 lvr with choicelend for (blocks revalue&refi + construction)

    Step 2 required no funds from myself because the new blocks had enough equity in them.

    No issues with titles. Just takes time.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,104
    Location:
    Melbourne, Nationwide
    There's any number of lenders you can do this with.

    When refinancing over 80%, you can probably get credits for the LMI you've already paid to some degree, but it's a tricky scenario. You'd need to confirm with the bank before applying where the LMI credits are actually held given that new titles have been issued.

    Like many things with developments, this comes down to how much equity you've got, which really it's dependant on the valuation.
     
  6. superace

    superace Member

    Joined:
    21st Aug, 2015
    Posts:
    24
    Location:
    Brisbane
    I wouldn't be telling the bank you are purchasing with the intention to subdivide. They could revert you to commercial lending. That being said, still get a good mortgage broker on your side if you haven't already done so!
     
    Terry_w likes this.