All Topics / Value Adding / The banks position with sub-divisions

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  • Profile photo of Karl and RitaKarl and Rita
    Member
    @karl-and-rita
    Join Date: 2003
    Post Count: 103

    Hi all,

    Just a quick question – If you have a mortgage on a PPOR and wish to sub-divide, does the bank need to know or approve these plans? Do they hold title/mortgage on the 2nd block as well?

    Thanks in advance,

    Karl and Rita

    The only thing that limits us…is a limiting belief.

    Profile photo of crjcrj
    Participant
    @crj
    Join Date: 2004
    Post Count: 618

    In NSW, if they hold a registered mortgage they will need to consent. If they hold an unregistered mortgage by deposit of the deeds they will still need to approve it as theyw ill need to produce the deed.

    The mortgage is over the whole of the subdivided land. If you want something released from the mortgage youw ill need to negotiate.

    Profile photo of diclemdiclem
    Member
    @diclem
    Join Date: 2003
    Post Count: 537

    Hi,
    Anyone know about victoria? I am in the same situation.
    Thanks,
    Sue [biggrin]
    Ps.S. Sorry Karl & Rita for butting in! [cap]

    “Be careful not to step on the flowers when you’re reaching for the stars”

    Profile photo of Karl and RitaKarl and Rita
    Member
    @karl-and-rita
    Join Date: 2003
    Post Count: 103

    Hi all,

    BTW, we are in QLD. And thanks crj for your reply.

    diclem, yeah no probs. We’re all out here to help.

    K&R

    The only thing that limits us…is a limiting belief.

    Profile photo of pfsfinancepfsfinance
    Member
    @pfsfinance
    Join Date: 2004
    Post Count: 171

    Haven’t done one of these for along time but this is what I remember.

    Plan of Subdivision has to be approved by the lender. As the lender holds a mortgage over the title, normally what happens, your solicitor lodges the plan of sub divison at the titles office after the bank has put a consent on the plan. The bank lodges the mortgage & title at the titles office and they are all allocated a dealing number. The Titles office then issue the new titles.

    It can take months for all this to happen and most lenders do not like allowing plan of subdivisions as whilst the documents are at titles office the lender is basically unsecured.

    Before you do anything check with your lender and find out if they are willing to allow subdivisions on property they hold as security.

    Kerri

    Financial Wellbeing Coach
    W: http://www.pfsfinance.com.au
    E:[email protected]
    E:[email protected]

    Development Finance Specialist

    Profile photo of pfsfinancepfsfinance
    Member
    @pfsfinance
    Join Date: 2004
    Post Count: 171

    Also the lender will also need valuations done and will also require new mortgages to be done over all titles for the new subdivision.

    Financial Wellbeing Coach
    W: http://www.pfsfinance.com.au
    E:[email protected]
    E:[email protected]

    Development Finance Specialist

    Profile photo of byronent_2byronent_2
    Participant
    @byronent_2
    Join Date: 2004
    Post Count: 337

    I am in this same boat.

    Has caused lots of grief. Takes 6-8weeks just too register the approved plans and the lender takes all the new titles until you negotiate, refinance or gear down the loan to allow them to release some security.

    I have to say, no bank likes to reduce their security.

    Byronent
    Adelaide SA

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