Do Banks loan you money to build a house?

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TiffanyG
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@tiffanyg
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Post Count: 34
February 11, 2011 - 12:01 pm
Hi,
I’m thinking of having a house built, and was wondering do banks lend you the money for these? Thanks
Jamie Moore
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@jamie-m
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Post Count: 5,069
February 11, 2011 - 12:04 pm
Yes – it’s called a construction loan.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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TiffanyG
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Post Count: 34
February 11, 2011 - 12:19 pm
Cheers Jamie
number 8
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February 13, 2011 - 10:37 pm
<moderator: delete flame>
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keiko
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@keiko
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February 16, 2011 - 5:32 am
Will the banks lend 100% construction loan
Richard Taylor
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@qlds007
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Post Count: 12,024
February 17, 2011 - 11:25 am
Yes with equity in the land and or other property.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
keiko
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February 18, 2011 - 12:43 am
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
traolcoladis
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@traolcoladis
Join Date: 2010
Post Count: 19
February 18, 2011 - 6:02 am
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
Matt.B
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@matt.b
Join Date: 2010
Post Count: 9
February 19, 2011 - 10:58 pm
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
Richard Taylor
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@qlds007
Join Date: 2003
Post Count: 12,024
February 20, 2011 - 1:39 am
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 | Australia's leading private lender
Richard Taylor
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@qlds007
Join Date: 2003
Post Count: 12,024
February 20, 2011 - 1:40 am
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 | Australia's leading private lender