Refinancing after subdivision but Before Construction.

Discussion in 'Loans & Mortgage Brokers' started by Jayr, 19th Aug, 2019.

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  1. Jayr

    Jayr New Member

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    19th Aug, 2019
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    Newcastle
    Hi Everyone,

    I watched a video from one of the property gurus and this is the strategy scenario:

    Buy a house on a subdividable block of land, then do a battle axe subi, then after the subdivision is finished, he sells the old house in the front. Then he organize to build a duplex at the back, then strata. Here is the question. He said we can refinance the 2 duplex even before start of construction and getting the duplex strata titled, so that he can move to the next splitter project cutting the waiting time for the build and strata. Is this possible? Does the bank/lenders allow this?

    TIA
     
    Jayr, 19th Aug, 2019
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Subject to vals and serviceability this is an every day occurence to pull equity on the new block towards the construction.

    Separate titles before valuation is usually a necessity sine valuer will shade a "one line" valuation by 15 to 25 %.................thus potentially killing the deal, or causing a large LMI premium needing to be paid, biting into margins.

    ta
    rolf


    ta
    rolf
     
    Rolf Latham, 20th Aug, 2019
    #2
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If there are separate titles they could dealt with separately - mortgaged to different banks, sold, transferred, leased etc.

    Might even be better if they were mortgaged to separate banks.
     
    Terry_w, 20th Aug, 2019
    #3
  4. Empathy

    Empathy Member

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    Hi I was just wondering if you were able to do this in the end? That is strata titling or torrens tit.ling the duplex prior to construction
     
    Empathy, 23rd Jan, 2021
    #4