All Topics / Finance / Subdiving land and certificates of title

Viewing 4 posts - 1 through 4 (of 4 total)
  • Profile photo of LinarLinar
    Member
    @linar
    Join Date: 2004
    Post Count: 567

    I currently own a block of land outright that sits on one title.  Council has given approval to community title the land into 3 blocks.  I have not yet taken the final steps to get the three titles.  Those steps are basically the payment of some money and the lodgment of a final plan with council.

    I now want to take out a mortgage on the property.  As one block, the land is worth about $160,000.  As three titles the land is worth about $375,000.  A bank has agreed to mortgage the property.  Today the lender came back to me with a dilemma.  They are prepared to lend me 80% against the value of the three titles but currently there is only one title.  The bank's concern is what will happen when three separate titles are issued.  Will this mean that the bank then holds a mortgage over a title that no longer exists?

    Basically the bank has said to me that they can only lend against the one title until such time as I get the three titles unless I can come up with a way to overcome their dilemma 

    Has anyone come up against this before?  Any suggestions on how to overcome this?

    Comments would be appreciated.

    Cheers

    K

    Profile photo of tammytammy
    Member
    @tammy
    Join Date: 2005
    Post Count: 155

    Is there any particular reason why you dont complete the subdivision first? Sorry for such an obvious question!
    T

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    The bank will only lend on what it is at the moment, but just having the approval to subdivide should have added value and increased the amount you can borrow.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of LinarLinar
    Member
    @linar
    Join Date: 2004
    Post Count: 567

    Hi Tammy

    The reason we are getting the mortgage now is because we have a serious cashflow shortage!  We need the money to continue the subdivision.

    Terry, the valuation didn't say that the approval made it more valuable, but what the bank has agreed to do is to lend me 80% of the current value and once it the three titles have been issued the bank will increase the loan to 80% of the subdivided amount.

    I've got to hand it to Commonwealth Bank.  They have been excellent with me on this deal.

    Cheers

    K

Viewing 4 posts - 1 through 4 (of 4 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.