Single Title Loan construction loan for 2x townhouses

Hi Brain trust/ Hive,

So basically I have received a preapproval for a 90%lvr for a property I purchased, from ANZ.

However, only was approved for a 70% LVR from ANZ for a construction loan to build 2x townhouses as it is on a single title.( I was expecting 90%LVR) and as per my broker that this is a policy of ANZ ( max 70% for construction on single titile). Apparenltly, this did not come up in the initial meetings between the broker and banker.

And now he is approaching other banks such as Macquarie and BOQ to salvage the situation.

Also, strongly encouraging me to use parental guarantee for the remaining shortfall of LVR which requires my parents to refinance with ANZ. I can't help but think that its another boost of commission for the broker? Could there be a hidden agenda/conflict of interest? And deliberate strategy directing me to ANZ knowing this policy beforehand despite my requirement for 90% lvr.

1:
Have any one else had issues with ANZ in regards to do this?

2:
Is it unreasonable to have expected the Mortgage broker to know about this beforehand? After all, this is their expertise.

3:
What are the general polices of different banks in regards to LVR for single titile dual construction loans? Which bank provides the max LVR?

Thanks for your help

 

brokers don't meet with bankers. They suggest lenders based on lender policy
1. I believe this is standard policy with them
2. they should check before lodging
3. It will depend on the circumstances. ST G and BW are good for multiple construction

 

For multiple dwellings on a single title the banks apply a "discount in one line" to the gross realisable value (GRV). This might be a 20% reduction as the properties are not yet subdivided and therefore cannot be sold separately.

 

90% LVR for 2 dwelling single site development construction ? Good luck. Surely the broker knows that lenders dont do 90% LVR to build and cautioned that at the very first suggestion that is what you wanted. Even with a fixed price contract there will be cost variances and the site may be unable to complete with insufficient funds. 10% equity is a major lender risk and they may decline a high risk. You didnt chase pre-approval ? Other property etc may assist so 90% LVR on the one property may work if the lender has additional security etc. The valuation method may also be as Hamish describes.

Refinance on completion could be an option when the completed dwelling can be revalued. 90% may still be a stretch. And could even require new LMI to be paid if a different lender comes to the party on refi.

 

Theres a lot of costs in this that may be unforeseen - as Paul mentioned, 90% of what value is important here. ANZ are at 70% for dual, its obscure policy though so its not unusual he won't know this.
Overall this isn't an easy deal to finance and your expectations are high - its worth factoring that in. If the broker is working hard to get the deal done, it seems like his doing his job well enough.
Guarantor approach may be clever to avoid LMI, I don't think that's a bad solution, worth discussing and seeing how it works in your situation. Overall the risks may outweigh the costs.

 

Which bank is your parent's loan with? Assuming the existing lender will accept, ANZ is happy to take a second mortgage, I do them all the time.

I do however doubt ANZ would do a guarantee on a 2 on 1 title in the first place, but I could be wrong.

 

Do you think it is unlikely to happen for even Medical professionals? I thought St georges, Macquarie and BOQ still do 2in1 title 90%lvr construction?

 

CBA

Why do banks perceive 2 in1 title as high risk. Surely dual construction and subdivision after- is common practice?

 

Terry is right, this is a normal residential loan so don't know why he needed to meet a banker.

And 70% lvr is noted on their policy for multiple dwellings under one title.

So someone hasn't done his homework.

 

Plenty do 2 one title constructions. Macq unlikely the be lender here at this LVR. CBA, WPC Group, NAB, private channels if your income is strong.
ANZ is just the wrong lender selection here.
Note other hard costs as part of your DD on the development project that may not be able to be financed.

 

Does not play well on ACA 'my kid made me guarantee his property development and the bank took my house!' etc.

I would give it a 99.99% chance CBA would grant their consent to the second mortgage unless there is something extraordinary going on.

They would not be my first preference.

 

'Everyone' can afford one half of a duplex, bot everyone can afford 2 of them.

The pool of buyers who can afford or want to purchase 2 properties is much smaller than the pool of buyers for a single dwelling.

 

Understood. But once the property is subdivided on completion that takes away the risk. I am sure it is common practice for multidwelling (2dwellings) will eventually become subdivided into each property having its own title.

Can't the bank extrapolate this from the start and deem 2 in 1 titile will eventually be be 1 title property?

I can't see why the bank would think the subdivision itself at the end of the project deemed risky enough to place more restrictions.

 

It will only be a one title property if you can subdivide it - and then you will still have 2x 1 title properties next to each other.

 

So interesting update.

BOQ have given written confirmation that they will consider 90%lvr on construction above the standard 80% lvr as per my mortgage broker- whom liased with the bank.

So the plan would be to refinance the ANZ purchase loan with BOQ after settlement- for the construction loan.

Let's see how it goes

 

My finances was relatively complicated with BAS annulisation required with only 2 BAS (medico) and changing jobs with new contracts signed. Maybe that's why?

 

Can't really comment on that too much cause I don't know your all finances.

But facevalue, youre trying to get a loan approved at 90% under lo doc with a major is like unheard-of.

Unless you were trying to get LMI Waiver ?

But then again ANZ written policy is 70% for what you want to do.