Refinancing process for newly built duplex

Discussion in 'Loans & Mortgage Brokers' started by Anjohn, 6th Jun, 2020.

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  1. Anjohn

    Anjohn Well-Known Member

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    8th Jun, 2019
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    Sydney
    Hi, I have a block of land with DA to build a duplex with strata title subdivision. Land and build price is $1m, expected end value is $600k per side. Assuming LVR 70%, that’s 700K loan and 300 deposit required plus other cash costs say 60K (stamp, interests, legal, agent) making my total cash contribution 360K. My purpose is to get most or all my cash investment back through selling 1 unit and keeping the other unit, but I don’t quite understand how the finance will be organized. My assumption is that after construction and subdivision are complete, the 700K loan will be split to 350K on each unit. Unit 1 sold for 600K, 250K cash will be received by me after paid off 350K loan; Unit 2 is refinanced at 600K with LVR 70%, 70K will be cashed in after paid off 350K loan, so total cash to be received is 320K (250K+70K). Is my thought correct in mortgage perspective?
     
  2. Terry_w

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

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    After completion you will have one big loan and one title. When subdivision happens they will have to release the mortgage and then mortgage the 2 lots separately. a loan is separate to the mortgage and you will have to instruct them how you want it. Don't assume - but instruct. if you leave it to the bank you will have 2 titles used as security for one loan and then they will want a valuation and may only release the mortgage if they get all the sale proceeds to reduce the remaining loan.

    There are various strategies to increase borrowings with this, so you get more 'cash' back. But there are tax implications to consider as well.
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    What does Credir Adviser Suggest ?

    ta
    rolf