Join Australia's most dynamic and respected property investment community

Loan for knockdown and rebuild for investment.

Discussion in 'Property Finance' started by Byeow, 11th Jan, 2016.

  1. Byeow

    Byeow Member

    Joined:
    20th Oct, 2015
    Posts:
    23
    Location:
    Melbourne
    Hi,
    Normally when you buy an IP, your borrowing capacity takes nto account the potential rental income you will get after you purchased the IP and rent it out.

    However if I'm borrowing for a knockdown and rebuild with the intention of renting it out after development is completed.

    Will the bank take into account the potential rental income the new home will fetch in deciding your borrowing capacity?

    Thanks
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    1,165
    Location:
    Gold Coast
    Typically yes

    In scenarios like this its very worthwhile to run the numbers, even if income is supported and OK, the in between period of land only value can cause major LVR issues

    ta
    rolf