Loans for Significant Renovations

Hi team,

I am looking to take out a loan for significant renovations (~300k) and believe that I read somewhere on the forum that some banks take the final valued amount of the property into consideration when calculating the LVR. Is this correct, and if so does anyone know what banks offer the product?

I am with St. George at the moment, and they will not consider it. They also have said they will not revalue my home until I have chosen to refinance.

Any insights would be appreciated.

 

For most lenders this will be considered a construction loan and you'll need all docs up front (fixed price build contract, copy of plans, etc) for the valuer to be able to do an "as if complete" valuation. They'll then lend against that valuation and control the draw down through progress payment stages.

Some lenders will look at it differently and allow up to 80% LVR against the land value of the property, or allow unconstrained cash out against another property/security without the need for a construction loan.

 

Broker could order a St George valuation on your property today, no reason why the bank couldn't do it.
Terrible service, time to engage a good mortgage broker instead.

 

Thank you for the advice, I will check in with a broker and report back.

 

Stupid question here. Do you need to provide asset/liability info and prove serviceability to get a construction loan?

If not, does a construction loan reserved for larger projects like an expensive extension/new build as opposed to a say, a $40K cosmetic reno?

 

Yes, it's still a regulated residential loan but the bank controls the release of funds to the builder as each stage is completed.

For a $40k reno it would be simpler to just release some equity and do it that way.

 

I have equity...I cant release.

 

I'm in the same boat, I could really do with about 50k for a reno I'm working on but my serviceability is maxed out. So I'm doing my reno paycheck at a time and it's painfully slow.

 

Nothing wrong with being a slumlord from time to time.

 

Na it's my PPOR

It's going to just remain empty until I finish renovating it.

 

With the current lender, have you checked serviceability with other lenders?
Could be worth a shot, disregard if you've already tried via a broker.

 

Yes. No is the answer (brokers and banks).

 

You don't!

You might have property with equity that you cannot borrow against.

 

Same diff?

 

The way you worded it sounds like the bank has something of yours which they are not letting you use.
But the opposite is really the best, you want to borrow something of theirs, which they won't let you.

 

I assume you're doing a major structural renovations for $300k.

I dont see why St George wouldn't take it on as they will just treat this like a normal construction loan and normal process with applying for a new loan.

Looks like someone else is going to pick up your business.