Loan advice needed for knock down rebuild

Hi All,

Just looking at a property for knock down rebuild. Haven't put offer yet. Thought it is wise to check in this forum from loan perspective.

Property is unliveable. Landvalue is $520k. Have more than 20% deposit. Plus another 50k as buffer.
Both of us work. Have borrowing capacity of 850k.

Will any bank give loan considering land value + construction?

Thanks,
Vish

 

Some would lend on land value, then contract for construction. Others may not lend at all.

 

Land value only unless you've got a contract to build. Can do a pre approval for the construction with most lenders.

 

Thanks. No major concerns. I have heard many scenarios which was new land + home packages with bank loan. Havent read many knock down rebuild stories with Bank loans. So just checking whether it is doable. I will check with financier for more details.

 

That is a great point. Thanks. So I have to be mindful of my offer. If I offer too much than the land value by NSW website, then I may deplete my buffer.

 

I don't know about other 2nd tier banks but for normal big4 a knockdown rebuild is not a problem. You have two options either do it with a fixed price contact or you obtain multiple quotes from tradies and do a cost plus loan.

 

I know it’s old, but did you end up proceeding? Any lessons learned that you could share? Thinking of doing the same.

 

I seem to be doing a lot of knock down/rebuilds at present (not owner builds)

General scenario is that the client obtains a fixed price build contract - and we order an "on completion' valuation which takes into account the anticipated end value of the property once built. The lender that loans against that value.

Without a fixed price build contract I'm sure your options will be limited.

Cheers

Jamie