Hello everyone.
I am from adelaide and would like to develop properties.
However, I would like to know how the finance side of things work?Eg, if i buy a piece of land worth 150k. Then subdivide it into 2 lots. Then put 1 ouse on each at 150k. The total will be 450k right?
But how and when do I have to start paying for the loan? I hope not all 450k at once!!! And if so, how do people do it?Can someone offer advice as well as maybe contacts I can get in touch with that can help?
Thank you.
Jindou
0434 141 543[biggrin]
speak to the lender!
As far as buying land is concerned as soon as titles change hands I think the construction payments are made as progress payments as milestones are reached during construction. The interests starts as soon as payent is made. The good news in a booming market especially like WA you can sell the house before it is even finished and also not even complete – so the new owners can finish it off to their liking.
Hi Jindou,
In answer to you question, you can subdivide before construction or after.
You are correct, with a subdivision, you would have the individual value of each strata block and then the value of the construction.
So the total in value would be 600k.As the purchase of the land was 150K you would have interest only repayments on this amount payable one month after settlement of the vacant land purchase.
With the added value of the subdivided block, you would be able to finance 300K for construction of 2 houses.
I have a construction deal I am taking care of right now for a client. 2 separate green title blocks, construction of 3 townhouses on each.
Kind regards
Wayne Costello
MORTGAGE MIRACLESMortgage Miracles
Livingston Marketplace
Shop E / 28 100 Ranford Road
CANNING VALE WA 6155If you want my 2 cents worth you are better at looking for an experienced local independant mrotgage broker who is a regular poster on the forum.
Someone like Steve at Mobile Mortgage could help you i am sure as he is only a good 5 iron away.
Richard Taylor
Residential & Commercial Finance Broker
**Lodoc Commercial loans from 7.39%**
Licensed Financial Planner
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
It would depend on which lender you use however most of them require you to start making payments as soon as you have drawn down any part of the loan. Most will allow interest only during the period of construction and you only pay interest on what you have drawn on. A lot of them will also allow interest only for up to 10 years afterwards. YOu just need to shop around (or get an experienced broker/mortgage planner to do that for you). Some lenders will also allow capitalisation of interest so that you are not making any payments at all however you usually need to have equity in the property being contructed or another property [aacool]to allow this. Hope this helps
Anita Marshall
Mortgage Planner
Advanced Finance Solutions
http://www.advancedfinance.com.au
[email protected]
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