Property with permit for 5 unit site Lvr?

hi guys.

Saw a property in north west of Melbourne which has a house currently but a planning permit for 5 townies. Site is 721 Sqm. Given your experience with many lenders what lvr do you think I'll be able to get? Given the permit has added value to it will they scale back the lvr depending on how they value it? Property on market for high 8s. I'm only looking at maximum 80 per cent lend.

Thanks

 

That's what I'm afraid of. Contact price would be mid 8s so no chance of resting off contract. I know Some would scale it back to 65 per cent I reckon.

 

Long form valuation is not the end of the world, but it does introduce more risk that the valuation will come in under the purchase price.

If you are making an offer I would consider putting a subject to valuation clause into the contract. Talk to a solicitor/conveyancer.

If you tell the bank you are just planing on using the property as an investment then 90% would generally be fine.

 

Thanks Simon. Would a long form entail then the valuer doing a feaso that the project related site value stacks up with purchase? What methodology would they use?

 

The valuer has to 'calculate' the 'value' of the planning permit. This is very difficult to do as there are generally very few (or no) comparable sales. When valuers lack comparable sales they generally get conservative.

Think of it this way: The house without the permit is worth $700,000 (this is relatively easy to for the valuer to calculate), but you buy the property for $800,000. They have to answer the question 'is the permit "worth" $100,000'. That's where the issues generally come in.

Does that make sense?

 

Totally. Thank you

 

Try using a COS val with CBA or St G/Westpac/ANZ. At 80% should be do-able.
Avoids the risk entirely.
You will need to be able to service with them. If going to non-banks for servicing, than this option won't be available to you.

On a recent Sydney deal for a ~$1mill purchase price dev site, 3 vals, 3 lenders.
One at 860 (land value, with no premium attached), one at 1.01m (valued the development potential) and the other a COS val acceptance with max 800k loan size.

 

Spoke to westpac direct would only entertain 60 per cent on the value as per valuation. Interesting how everyone does operate differently. Will keep on trying!! Thanks

 

Why not save yourself the time and effort of speaking to various lenders by engaging a broker?

 

Because this is an open forum where all discussions around property finance are on the table irrespective of its through a broker or otherwise.

 

All good, didn't mean any offence, was just referring to this bit:

My intent was to suggest that instead of calling different lenders, it may be a good idea to just speak with one broker, thus saving you time and effort

 

And save potentially their credit file, instead of multi-bank hits until their file is toast.

 

Discussion is one thing, but the guys with the know how are here and helping you, did the bank help you ?

Seems a no brainer to me to use a broker.