Taking another home loan while building

Hi all

I am newbie to property chat. I am currently in the process of building a duplex. Loan amount 896k. Land loan 400k already settled. Waiting for DA approval to build.

If I want to take another loan to buy a 400k investment property (80% borrowing), is it still possible to take another loan while building. Will the lender will take into consideration land loan and construction loan total 896k even though construction is not drawned down yet? If they take both land and construction loan as debt, will they also take 1200 potential rental income for 2 duplex I am building? I got rental appraisal from agent for 1200 rental income.

Can anyone recommend me any good brokers with construction/development experience in Sydney? Liberty and Pepper dont do construction loan. Is there any lender who has generous calculator and will do construction loan? I have approximately 1.7 million debt now

Thank you.

 

Yes Hanh no issues in taking out another loan whilst building on a non related security.

All lenders will merely take the total exposure of the construction loan (assuming it is fully drawn) as your current debt and base their servicing on this basis.

From your post it sounds like you are looking to build again and there are a number of lenders that have generous servicing calculators for construction.

 

We've done this with St G recently. Their calculator is decent and their policy allows use of rental appraisal to evidence the income of the future duplex construction. They will indeed take the debt as if fully drawn into their assessment though.

 

Not all lenders will use the proposed rent in servicing but a good number do.

 

Thank you for your replies.

My construction loan is not fully drawn yet. As I am still waiting for DA approval to build.

I contacted St George and they said I reached my maximum borrow capacity. Our income is not high , only 113k combined. We have enough cash for 20% deposit for all purchases but our income is not high enough to service the debt which will be 2.2mil by the time duplex construction is fully drawn.

I plan to buy another 400k investment property and build another house 560k for both land and build (signed contract) Which lender is more generous than St George and will take into consideration future rental income for 2 duplex?

We currently rent our IPs privately so will the rental agreement be enough to demonstrate rental income? Do we need to show bank statement or tax return to demonstrate rental income?

Thank you. Appreciated your help

 

May I ask which lenders will use the proposed rent in servicing?

 

Most will. There are lenders who are more generous for the new purchase as long as you have the 20% deposit - I know Liberty won't use the rental income, but others will.

 

Thanks Jess. My land wont be registered until May. But I signed the land and building contract. Can I get unconditional approval if I apply the loan now with the land and building contract? Or do they only give me approval in principle now and unconditional approval when the land is registered?

After the land is registered we only get 2 weeks to settle so if I dont get unconditional approval before land registration I dont know if 2 weeks is enough time to get approval and settle.

 

In the past you could have valuation and unconditional approval for H&L prior to titles being released. Lately valuers have interpreted their guidelines about identifying the lot to mean in practice they wont do a valuation until the roads are in and the lot pegged out. Which isnt generally done by the developer until a couple of weeks before settlement. Its painful, especially for FHBs.

2 weeks isnt enough time in a lot of cases. The experience I have had is developers understand the new requirements and allow settlement extensions without penalty. It also means developers have to be a bit more pro active and let clients and their brokers know where they are up to with land title dates, end of work dates etc

 

You can get the approval conditional on the valuation prior to titles - same as a fully assessed pre-approval in effect. Then once the titles are ready to go, order the Val and finalise the loan. This can be done within the two weeks required to settle with many lenders - but there will always be the super slow exception!

 

Thanks guys. My land developer is Stockland. Land is in Willowdale, Leppington. No matter how hard my solicitor tried to negotiate with them for 4 weeks settlement after registration date, they refused and sticked with 2 weeks.

2 weeks is too rushing for unconditional approval and settlement. It used to take me 3 weeks to get NAB unconditional approval for duplex construction. I dealt with bank directly. I dont know if broker will be quicker than bank? Can valuer do valuation when a month before registration?

 

As noted, when the pegs are in and the roads laid.

 

It's not too short, as long as you/your broker is organised.

 

Hi Jess

What interest rate can I get for my loan with a gennerous lender who will do construction loan? Is it easy to revaluate and access equity after I finish building?

Thanks

 

Depends - a proper check of your servicing capacity is required but they won't be the low rates you'll get from the more mainstream lenders. You could be looking at mid 4's upward.

The ease of reval also depends on lender - you may need to pay for the valuation yourself with some.