Most banks will not give you a copy of the valuation, but they will usually let you know what it come in at. CBA used to not tell what the valuation figure was, but you could work it out easily enough if you wanted to borrow 90% and they said the  max loan is $xxx.

Hi Gezzy

Best to explain with an example.

you have a $100,000 home loan
$20,000 cash
and wish to buy a $100,000 IP.

what would you do?

most would use the $20,000 for the IP as deposit, so end result is
$100,000 home loan = non deductible interest
$80,000 IP loan = deductible interest

But I would do this
$20,000 deposited into the home loan
$20,000 borrowed from the home loan
$80,000 borrowed for the IP
=
$80,000 home loan
$20,000 + $80,000 investment loan = $100,000 IP loan

You would have the same net loans, but increased your deductible interest.

Of course you will need to set the loans up properly, best to have a split on the home loan so the $20,000 is separate. Also best to have all loans IO with a 100% offset account.

1. usually valuations are conducted.
There are basically 3 types of valuations the banks do.
a) full valuation
b) short valuation
c) kerbside or drive bye valuation.

to this we can probably add
d) internal valuation where they don't use a valuer, but just look at some figures for the area and see if your property is in the range.
e) no valuation at all. Some banks just go on the figure on the contract of sale. there are conditions such as must be through a real estate agent etc

Some or most banks have a policy of not releasing the valuation – but sometimes individual managers will give you a copy. Best to ask the person who did your loan for you.

Banks will not accept valuations they have not ordered. Even if you use the same valuer as they eventually do, they will have to reorder it – the valuation should come in the same, but there have been many cases where it suddenly drops when a bank is instructing them.

If you buy a place for $300,000 and the bank values it at $290,000 then you only have equity of $290,000 less the loan.

There is a way to know how much the value is worth before committing. You can order you own independent valuation, then sign contract subject to bank finance and then wait for the banks valuation before deciding. or skip your own val and just use the bank's. It may cost you a bit more, but could end up saving you overpaying for a property.

eg. one of my clients recently signed a contract for $450,000 purchase, valuation come back at $370,000 (because of some structural issues). But these people actually were locked in when they came to me. wonder what happened to them…

of course!

Most people use the equity in their home. It wouldn't be a good idea to save up a separate deposit for an IP if you still have a loan on your home as you would be losing tax deductions.

St G has a really good LOC – but why do you need a LOC if you are refinancing? They can get you into a lot of trouble with claiming deductions.

I had a friend who went to the $16,000 Henry Kaye bootcamp, many years ago now, with the intention of leaving before lunch time on the last day and receiving her money back.

She ended up staying for the full program and forfeiting this right because of getting caught up in all the hype during the seminar. Also there will be not notification at the time and it is easy to forget.

My friend regrets it now – she is still paying off the loan to get into the course.

Some lenders can still do up to 4 dwellings on one title. I was reading bankwest's policy yestreday and they will consider4, up to 80% i think – but on a case by case basis.

Since you haven't started the process yet, i think you should consider applying for finance for the land and a pre-approval for the building component at the same time. Then you go and get your quotes, council approvals etc.

You wouldn't be able to get more than 80% LVR (based on contract). And banks may want to reduce it furthr to around 70%.

Serviceability will depend on your other debts. Banks are generally unwilling to take guarantors these days, except between spouses (married and defacto) – unless the third person is part of the project. eg on title, or shareholder of the company, beneficiary of the trust etc. But then you won't get the grant, unless in your individual names and then only if the other person is eligible etc.

These days it is not as easy as it sounds. I tried to do one recently, but the mortgage insurer knocked it back.

Basically you, subject to serviceability etc, can get a loan for 80% of the building contract and the value of the original house. But valuations are coming in tight so if you don't have much equity it may be hard.

You can't really capitalise interest, but if you have enough equity you may be able to borrow extra, put that in the offset account and use it to fund the repayments for a while.

yes it is hard, especially now.

I have one client who is a builder and wants to build his own projects. Actually had 2 clients, both were low doc types and I used to put them to Latrobe – but they will not do owner builder loans anymore. No one will – as a low doc.

St George do, or used to, on a full doc basis.

I don't know why they deem it more risky. Probably because of the potential to exploit the project – but they have valuers to check don't they.

A way around it is to get a friend who is a builder to make the contract, and then you sub-contract to them. But then there are various issues with warranty etc, and they won't want to do this for free.

You can't have your offset at a different bank!
I know ANZ and Westpac have full 100% offset accounts. St George also has one, though they can be strange with 3 different options so take care. NAB also have one, I think still as do Bankwest.