Is it possible to pull out equity during construction phase ?

Hi Experts in the house, can you kindly give me an opinion of what you guys think about the below scenario.

I am about to apply for a construction loan and i am hoping that i can pull out some equity in the process. I don't even know if this is something that is feasible or not. See specific scenario below

I owe 220 Thousand dollars on a piece of land.
I am looking to build a 300 Thousand dollar house out of which i will pay 30 thousand dollars upfront.
So effectively, my loan should be 490 Thousand dollars when the building is completed.

Since the bank will order a valuation of the property before the build is commenced. Hypothetically, If the valuation of the property comes back as 600 Thousand dollars. Will i be able to borrow 90% of that which will be 540 Thousand dollars ? Considering that i only need 490 Thousand dollars to complete the build. Will the bank allow me to pull out the 50 Thousand dollars equity at the time of the build assuming that i meet serviceability requirements ?

 

Thanks Rolf

 

Yes but some banks may want the released funds to be paid out at the end of the construction not during or at the start.

However assuming the land is worth $300K. Land value + construction cost = value (generally) then you could / should be able to borrow the funds upfront without exceeding the 90% LVR on the land so you should be able to find a lender to do this for you.

 

The other option is to get the lender to pay the builders deposit as 1st payment of the construction loan.