All Topics / Help Needed! / Do Banks loan you money to build a house?

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  • Profile photo of TiffanyGTiffanyG
    Member
    @tiffanyg
    Join Date: 2010
    Post Count: 34

    Hi,

    I’m thinking of having a house built, and was wondering do banks lend you the money for these? Thanks

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Yes – it’s called a construction loan.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TiffanyGTiffanyG
    Member
    @tiffanyg
    Join Date: 2010
    Post Count: 34
    Profile photo of number 8number 8
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    @number-8
    Join Date: 2010
    Post Count: 333
    Profile photo of keikokeiko
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    @keiko
    Join Date: 2008
    Post Count: 513

    Will the banks lend 100% construction loan

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Yes with equity in the land and or other property.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of keikokeiko
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    @keiko
    Join Date: 2008
    Post Count: 513
    Qlds007 wrote:
    Yes with equity in the land and or other property.

    Cheers

    Yours in Finance

    Richard

    As an example say you bought a property for say $500,000 and you put up $100,000 cash and then a couple of months down the track you wanted to bulldoze the house and build 2 new houses, would the banks need further cash put up front or how do they calculate it

    Profile photo of traolcoladistraolcoladis
    Member
    @traolcoladis
    Join Date: 2010
    Post Count: 19

    Is there an existing house on your piece of real estate. One thing to be careful of is the unknown. If you do have a an existing house there then you will need to make sure that demolition costs are included. Also with builders that you use it is imperative that you check the previous referrals from 1yr ago, 3 years ago and 5 years ago. Find out what problems if any have occurred.

    Also find out how quickly if at all the problems were resolved. My Wife and experienced a very costly issue with the first builder that we used and it cost us 30K and it almost cost my marriage as well.

    If they say that they have multiple locations around Australia ask them are these Franchises or is it all one company. Also where is the head office. You want the head office at the very least in your state or driving distance from you.Any more that 2 hours and it then becomes arduous to get complaints resolved.

    Hope this helps

    regards

    Profile photo of Matt.BMatt.B
    Member
    @matt.b
    Join Date: 2010
    Post Count: 9

    If the loan is being used to build an investment property, you may find that you can also borrow the interest that would be payable whilst construction is taking place. 

    Talk to a mortgage broker to see if they can help you out with that.

    Matt.B
    http://www.realestateinvestar.com.au/matthew

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Keiko

    In that situation it will depend on a couple of factors:

    1) The land value once the house is no longer there and
    2) The end value once the 2 properties have been constructed / lvr.

    As long as these 2 areas are covered off and subject to the normal underwriting and credit criteria Yes the deal can certainly be done.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Matt

    Capitalising interest is not standard in the residential arena more in the quazi development / commercial space.

    It would all depend on the loan to value ration to whether the interest could be capitalised during the construction process.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

Viewing 11 posts - 1 through 11 (of 11 total)

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