PPOR loan to construction loan

Discussion in 'Loans & Mortgage Brokers' started by Rits, 5th Mar, 2021.

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  1. Rits

    Rits New Member

    Joined:
    5th Mar, 2021
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    2
    Location:
    Turramurra
    I just signed up for a PPOR purchase loan with AMP with 2yr fixed and variable split.

    Hoping to start a knockdown rebuild in 12 months time to replace the old house. I will need further finance of ~$200k over the current loan to partly pay for the rebuild.

    Hoping to stick with AMP but curious how would the new loan get structured? Do I just ask for an additional $200k loan for construction or does the original loan fully switch to a construction loan?

    I expect be under 80% lvr for the end value of the rebuild house.
     
    Rits, 5th Mar, 2021
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    14th Jun, 2015
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    Location:
    Gold Coast (Australia Wide)
    As an aside AMP dont even like their construction product, but their Master Limit is Ants Pants for Active debt recycling.

    A build loan is normally a separate loan added to the existing,

    Be mindful that you will very likely need to actually reduce the current loans before construction, because once the house is demoed u then only have land content to support the loan, so hopefully your variable split is a decent size

    ta
    rolf
     
    Rolf Latham, 6th Mar, 2021
    #2
    Tony Xia likes this.
  3. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    23rd Aug, 2015
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    Location:
    Bella Vista
    Rolf is correct, AMP doesn't have the best construction loan product.

    On top of that you'd need to obtain a higher valuation so your "As if complete" valuation with the new build comes back higher so your total loan is 80% of the value of the property, unless you want to pay LMI.
     
    Tony Xia, 6th Mar, 2021
    #3
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