Purchasing 2nd property when 1st one is still under reno

I am looking at buying a property that requires substantial rennovation and then purchasing the second property immediately before the first one is rented out. Do banks use the estimated rent of the first property to calculate the borrowing capacity when assessing the loan application for the 2nd property?

 

Most will, but the appraisal would be on current condition, not reno'd condition.

 

Thanks, Jess. Which banks don't take the estimated rent of the first property in the above scenario

 

Even on the initial loan for an un-renovated property the cheap online lenders only want vanilla deals so may reject if their valuer says it needs big reno

 

Some do, some don't. Likewise in certain circumstances they will accept it and others won't.

Best to speak with your broker who can look at not just this factor, but the other 49 variables which determine which is the best lender to utilise. if you haven't got a broker as yet, it would be best to connect with an investment focused finance broker who will know how to work with these scenarios.

 

Liberty won't. Possibly other smaller lenders too.

 

Thanks, Jess, Corey and New Town

 

Just make sure the property is habitable in its current state. If it is uninhabitable, it can cause issues when seeking finance.

 

Everyone asks these question, like your insurer.

Frankly, most people doing renos do not even realise they have just broken their loan contract. Nor do they realise they have to provide warranty etc if they then sell.

And if something goes wrong in between, your insurer is going to walk.

If you go with the same lender and they find this first house half gutted, they will not proceed I would say. If a valuer walks in, they won't look past this either.