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Servicing a Construction Loan

Discussion in 'Development' started by Arnel, 4th Jul, 2015.

  1. Arnel

    Arnel Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    130
    Location:
    Perth
    Hi everyone,

    Can someone explain how lenders calculate your capacity (serviceability) to borrow for a construction loan?

    Would it be the same as a normal mortgage?

    thanks :)

    Arnel
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,159
    Location:
    Canberra and Sydney
    Same as normal.

    If it's an IP - some lenders will take into account anticipated rent.
     
    Terry_w likes this.
  3. Arnel

    Arnel Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    130
    Location:
    Perth
    Oh ok, thanks @James Bond

    Follow up question to that. In order to service 1 million dollar loan PP 275k empty block and build 750.

    What would your income have to be.

    I have a proposal to go 50:50 in twelve apartments that have DA Already.

    pp 550
    Build 785sqm at 1900sqm.. 1.5mill
    Plus other costs and buffer

    I was going to bring in s few friends of mine on my side, splitting my share of th 50% into three.

    How would we step this up?

    The site will be secured by s company that we both have 50:50 stakes in (each have a trust).

    Note: have signed for 5 units to be rented to NRAS for 50,000 per annum. Don't know if that make a difference
     
    Last edited: 4th Jul, 2015
  4. Be Developer

    Be Developer Property Developer Business Member

    Joined:
    19th Jun, 2015
    Posts:
    1,078
    Location:
    Australia
    @OSAN Properties

    12 apartments will require a commercial loan.

    Commercial construction loan works bit different then resi loan

    You will need pre- sale
    50-65% GRV
    need to pay for Full valuation
    QS report
     
    Arnel likes this.
  5. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,959
    Location:
    Perth
    Please be careful with ventures like this. Remember that it is likely that the more people you bring in the less banks will like the deal and it's quite possible that every member will be 100% responsible for the debt.
     
    OC1 likes this.