seeking finance for a backyard development at 57

I am 57 years old and my wife is 41 years old with two school aged kids . I have an investment property and planning on doing a subdivision .
I have a secure full time job and so does my wife . The IP has a mortgage of $240k and our PPOR($800K) is mortgage free. We have no debts except for CC with a limit of $6k
I plan on keeping the existing property (current market value $800K) and borrow up to $330K to $340K to build a 3BV town house.
I have not approached my current lender (CUA) nor have I approached any lender yet. I need conditional pre approval before I decide to apply for plans and permits . I am not sure under these current restrictive lending practices how to approach this
1. Should I get concept drawings from a designer and then approach the lender ? If I do that I will have to pay a designer and be prepared to lose the money if I am refused finance
2. approach the bank/broker and secure pre approval in writing and then kick start the process ?
3. Since I am 57 how will any potential lender approach this ,will they only offer a loan for 10years ,which is not practical etc
any thoughts and ideas please

 

If you couldnt get finance could you still proceed?
If not I would want to be sure I could get funding before paying out various fees

 

3. No.
You could work up till 75
Your wife still has about 30 years of work ahead of her. And your exit strategy may be to use super troopers pay off any loan

 

Hi Frank,

You've still got a good amount of working life ahead of you, so a decent exist strategy should suffice. Speak to a broker - they'll be able to look over your scenario in full and let you know if anything is going to trip you up.

A lot of success in this kind of deal comes down to how it's presented to the lender.

 

I'd advise against getting a designer to draw up plans, they don't design in a way that will be good for your hip pocket if you catch my drift.
Try to engage a town planner to go over your subdivision plans, and a project builder to see if they have any off-the-shelf plans that might come close with a few tweaks.
Then you can get a fixed price tender from them and take that to a broker, who will value the newly subdivided land value and the proposed build and allow you to borrow 80% of the end product value hopefully, which will mean you might not be out of pocket at all.
Regards,
Arc

 

I would start with some notional ideas of costs... eg town planner ? They may even identify a better use for the land v's your thoughts.

Then seek broker guidance on finance. As Terry said it could be the killer.

An option is to seek a DA and sell without doing anything. The sale may be a simple CGT sale at higher value. Why a subdivision ? A fully costed 2 lot subdiv isnt necessarily profitable. Investing in sound advice and costings may save you losing too. Are you planning to sell ?? The tax issues also need to be explored as the two options could have very different tax outcomes. Explained in our developer toolkit.

1. Keep
2. Keep / Sell
3. Sell new subdiv land
4. Sell new subdiv with new build

 

Thanks everyone . I will try and address what has taken place so far. I approached a builder that does spec homes on your land ie they have off the shelf plans that can be tweaked or panel beated. STROUD homes advised me I have get site services done at a cost of $1200, which will come off the contract price or I walk away with the report no worries contours etc and then get a fixed price . I managed to hammer him down to an approx price from a shelf plan for a single strorey 4BV 20 sQ home ,including 81 inclusions at $1560 sqm plus associated costs of $80 incl such as driveway,drainage ,landscape ,TP etc. not sure if I am comfortable with that .
My next option is designer to draw up plans, and request tenders from builders which has its drawbacks
I worked out from this short experience my construction budget will be $290K and my associated costs to be $70K incl
1.$25k TP,
2.$10K demolition of existing 4 car garage
3. ,Driveway front to back $10K ,(builder may add in contract ?)
4.Drainage $20,(builder may add in contract ?)
5 subdivion $5K
6,land scape $ 10K(builder may add in contract ?)
I am hoping I can absorb some of these associated costs such as drainage ,landscaping ,driveway into the $290K construction and only have to fork out $40K .
question is
1.will the lender ,lend up to 90% or is the LVR 80%
2. At this stage I dont have any written quotes ,just approximates ,what do lenders need to get un conditional approval?
I am not planning on selling any of the units front or back and will be keeping them. I am reluctant to pay anyone at this stage for site analysis or design concept drawing without having a commitment from a lender
thanks

 

$10,000 seems steep to demolish a garage!

 

$5k seems low for subdivision, is that only the town planner or planning costs? You will need to enquire about council fees, the can vary quite outrageously, i.e Mackay, QLD is $28k per lot created, where as Maitland, NSW is $8k per lot created.

 

The lender will lend 80% of the completed value,regardless of the build cost. However prior to subdivision the valuer will discount the value as you can’t sell them separately until the subdivisions through.
Regarding the other items, pool these together as invoices or have the builder put in an allowance into the contract so you can present the whole lot to the banks valuer.
Missing stuff will mean a lower value (a house without landscaping for instance) and may prompt the credit person to ask for how you are going to address these items if they aren’t included in the build costs/loan.

 

TP $25 K plus subdivision $5K incl titles office and surveyor charges

 

it used to be a work shop with 3 phase power ,park 4 cars to 5 cars in it ,worst case $10K

 

Okay, well town planner seems high then, haha, most subdivision quotes I've got have been around the 7k mark.

 

What do you mean ? I was quoted $15 K for plans ,permits and town planner fees incl council fees to secure plans and permits and another $10K for working drawings to get a BP . $5k if I want to subdivide whilst the construction is taking place