Sell house (structure only) to build

Discussion in 'Loans & Mortgage Brokers' started by Pie Head, 8th Apr, 2018.

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  1. Pie Head

    Pie Head Member

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    29th Jul, 2015
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    QLD
    Hi

    We are looking to sell our current home (structure only), have it removed from the block and then build on our current block.

    How does this work from the lenders point of view? Do they remortgage based on the value of the land, then provide a construction loan?

    Thanks!
     
    Pie Head, 8th Apr, 2018
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    pretty much

    the existing loan will be supported only by the land.

    We have done a few of these

    recommend you get your building approvals and fixed price contracts done and get a val/pre approval for the end product

    ta
    rolf
     
    Rolf Latham, 8th Apr, 2018
    #2
  3. Terry_w

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

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    You will need to get their permission to remove the house. Their security is a mortgage over the land, which includes the house. No big deal though it you are building.
     
    Terry_w, 8th Apr, 2018
    #3
  4. Pie Head

    Pie Head Member

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    Thanks Rolf and Terry for the replies, much appreciated.
     
    Pie Head, 9th Apr, 2018
    #4
  5. Corey Batt

    Corey Batt Well-Known Member

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    This. What Rolf is suggesting helps you avoid the potential pitfalls which can occur from a valuation shortfall causing a rise in your LVR, making the lender require you to chip in more funds than you might realise and stall the whole process. There's no point removing the existing house if it doesn't enable you to proceed with the construction directly after.

    Your broker will be able to help you through this process, nothing that difficult and some lenders are better in this space than others.
     
    Corey Batt, 10th Apr, 2018
    #5