Subdividing a mortgaged property

Discussion in 'Development' started by casuarina, 26th Dec, 2021.

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  1. casuarina

    casuarina Member

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    19th Jan, 2018
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    VIC
    Exploring a hypothetical situation...

    Say one takes out a home loan from a bank to buy a property. A few years down the track, they decides to subdivide the property. The home loan hasn't been fully paid out yet.

    At what stage during the subdivision project does the bank need to be notified of the subdivision project? Planning permit application, start of construction or final lodgement of plan of subdivision?

    Is there a possibility that the bank is not happy with the risk associated with the subdivision project and therefore call in the home loan?
     
    casuarina, 26th Dec, 2021
    #1
  2. Terry_w

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

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    Is the home loan secured by a mortgage over the property? This is what is important as the mortgage must be lifted for the titles to be issued.

    So the bank must be notified at the point of issuing title. However, you will likely have agreed not to change the security under the contract with the bank so you will need to notify them and get permission if you are knocking down buildings etc.
     
    Terry_w, 26th Dec, 2021
    #2
    casuarina likes this.
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