Lending for a 3 title construction

If anyone can help that would be great. Here is the scenario:

There is a family who own a lot (one title) currently in the process of subdividing lot into 3 titles. They intend on building 3 townhouses, one for each family member (father, son and daughter) plans have been drawn up and each have party walls involved.

The father and daughter have bought out their portion of the land with cash (1/3 each) but the son took out a loan with CBA for his portion.

They have asked CBA for permission to continue the subdivision but they have declined this, despite the very low LVR in play.

Now they wish to start construction, the father will use his own funds for his townhouse, the daughter and son both need finance to fund their construction.

They are in abit of a pickle now.
What options do they have? As all 3 town houses have party walls, subdivision hasn't been finalised and CBA don't want to allow the subdivision.

If anyone has had a similar situation but knows a solution please let me know. This is for residential lending not commercial . LVRs will be below 80%.

Hopefully Iv made sense

 

Sounds like a night mare. The children could sell the land, or the father can build all three and rent to his children. Seek legal advice. Alternatively, the father could sell the land and buy a house and charge board to his children.

 

Yeh it is. Mind you the children are adults with families, they all want to live next to each other on this lot

 

Can the dad instead lend the money to the son to pay out the CBA debt (effectively refinancing it), then complete division and finance can be sought for the construction and repayment of the debt owed to the father?

Otherwise I think this could be restructured to an alternative lender to make this work - CBA just isn't great in general for 3 lot division deals like this.

 

Do you think it's possible to lend for construction during subdivision or will they need titles first?

 

Depends on the LVR based on valuation of 3xtownhouses on a single title - which will be significantly discounted from what 3 individually titled townhouses would value at.

They really need to speak to a broker who is familiar with these types of developments - otherwise they will keep wheel spinning by dealing with a lender which isn't the best fit for the scenario.

 

From CBA's perspective, your seeking a construction loan for 3 units on one title, which is outside their policy. Seek the finance application with NAB/BW (or lenders that allow 3 units on one title) who should be more amenable to it (not outside their policy).

 

What a mess. Did they pay stamp duty on the transfers again? And CGT ? GST?

Why has CBA declined permission to subdivide? Outside of policy?

It sounds like the son may not have enough income. Daughter too perhaps.


Try another lender, next best I like Corey’s idea. Dad could fund it.

 

Well, the can probably afford rent and look to save a bit more before they apply for another mortgage in the future. It sounds like the adult children simply do not have enough to build at the moment. Sell, or try other lenders, I guess.

 

Servicing is not the issue nor LVR? It's more so about the complexity of the securities

 

Sounds like choice of lender is the problem then. St G might be good for this.

 

If anyone was curious..

Pepper home loans was the only one that could do it
Separate loans, separate building contracts, and party walls allowed - subject to titles

 

Not really, because of the party walls