Hey guys,
I've just put in an offer today for a piece of land which i am able to build 3 units on.
I was able to get a 60 day period to get finance. I was going to do it traditional way and just get loan for the land through bank/broker and then worry about the development loan later.
Is it worth looking at getting a development loan straight away?
I know that in order for the banks to give you second part of the loan (build consts) they need to see council approvals etc etc for the build… but should i seek this instead of just a loan for the property? would it save alot of hassle?
its not a PPOR but i will be claiming the 21k building grant because im a first home buyer..
Would a bank be better to set this up with or go through a broker? I need to know whats going to save me alot of hassle.
Also if anyone has experience with these types of loans.. maybe can you point me in the direction of products recommended and by which lender…
thanks guys!
Jezza, a prerequisite for FHBG is that it is to be a ppor within the first 12 months. Buying a development site does not preclude you from getting the FHBG on another property.
Hi Jezza
Sorry to appear to burst your bubble but obtaining development style funding is not that easy in todays climate especially if you have not done a project before.
Lenders will want to see a good deposit, income to support the loan along the way and even the odd presale or 2 wouldnt go a miss. Secondly your standard conventional Bank lender will not normally allow more than 2 dwellings on the same title so a 3 it normally becomes the domain of the specialist lender.
These loans cannot be mortgage insured hence the maximum lvr at 80% and you will need to fund the hard costs along the way which dont form part of the construction.
I do a lot of these sorts of deals for both myself as well as investor clients and they are a lot harder to obtain these days than they were
6- 12 months ago.Richard Taylor | Australia's leading private lender
wat about if i get a garantor for the loan?
Unless it was a wife or spouse a Guarantor will not normally enhance servieability.
If they are prepared to offer their property as security then possibly a different kettle of fish however further information would be required to comment fully.
Richard Taylor | Australia's leading private lender
Richard i understand where you are coming from and serviceability was what you were emphasizing i think.
My wage at the moment is around $120k with no dependents.. no other expenses other than board and i have a savings account of around $30k. I have also have a great credit rating with previous debts being payed off in full before the due dates etc etc.
Surly that would count to the loan?
I was told about 3 months ago by my bank manager that if i can guarantee a % of the loan, i can borrow to whatever i can afford to service.
But yes you are right, to have a guarantee is another kettle of fish.
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.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Jezza1,
You sent me an email through my "contact form" which subsequently I didnt know I had, nor do I know how to use it..! (sorry)
So would you mind PM'ing me as I am keen to chat further
Thanks, Azalia
Thanks Terryw. One of my cousins is facing the nearly same problem. I was trying to help him through some advice. Your post was very helpful for that.
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