Hello & financing reno

Hi there

I have lurked for a while and found some useful info so I thought it time to sign up and say hello.

Myself and partner are on the Gold Coast and about to buy our first home. To keep within the budget for our deposit amount we are looking at 3 bed houses with a view to extending and renovating to make 4 bed.

We would like to commence the improvements sooner rather than later but before we commit to buy a 3 bed we need to consider how we would finance the extension and reno. Looking online it seems the usual way is to release equity which we will not have, but I have also seen construction loans mentioned.

My question is would anybody here know if this is a typical way to finance an extension (provided the lending criteria is met) and would we need to provide a deposit for the construction loan, similar to the down payment for a house?

Thanks

 

Yes renovations are funded via construction loans all the time
Typically you would need to get quote, plans, specs etc - get an as if complete construction valuation and this will determine how much cash you need to put towards the renovations (if any)
Can I ask, is this part of a 'flipping' strategy or you just need a house with 4 bedrooms?
Are you using a mortgage broker for your finance, if not, WHY not?

 

You’d need a construction loan.

You provide the lenders with plans, building contract etc - they’ll order an on completion valuation.

They’ll lend against that valuation result. The valuation amount will determine whether you have enough equity to obtain the loan without forking out more cash.

Cheers

Jamie