All Topics / Finance / Subdivision Finance – Council Advice – East Toowoomba Property

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  • Profile photo of fredo_4305fredo_4305
    Participant
    @fredo_4305
    Join Date: 2009
    Post Count: 336

    Hi All,
    I currently have a property which has development approval for subdivision. The property is located in East Toowoomba. The problem I am facing with council is that the proposed block cannot be issued a separate title until all the subdivision works are complete. This creates a problem as the bank won’t lend for a complete build or subdivision as there is no title.

    Ideally I would like to do a complete lend of X amount of dollars that includes all the submission and build works. The project gets completed and title issued at the end.

    I don’t think I’m speaking double dutch and am relatively knowledgable on finance and council procedures but the whole thing seems quite difficult and backwards.

    I don’t see how different it is to building as a new home builder in an estate, the bank wouldn’t expect me to pay the subdiv works up front then fund just the build, its all packaged up?

    The figures in the deal on completion stack up. Mortgage is 336K Value 420K. I also have approx 50K in the bank.

    Help!!??

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

    Fredo i think you are confused as to what can be borrowed and what cannot.

    I am assuming you are trying to do the deal as a resi deal and if this is the case max loan will be based on the fixed price building contract or valuation whichever is the lower.

    Subdivision costs are soft costs and you will not be able to borrow for these unless you have equity elsewhere or you builder covers them into construction costs.

    Cheers

    Yours in Finance

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

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of fredo_4305fredo_4305
    Participant
    @fredo_4305
    Join Date: 2009
    Post Count: 336

    Hi Richard,
    I am wanting to do it as a resi deal, however I couldn’t care which way the money is lent. I was wanting to package it all up in the construction costs, the way I look at it is that mum and dad building a home don’t pay up front the drive way, fencing, water, sewage etc etc and borrow the remainder for the bricks and mortar.

    Would it be able to be packaged up?

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

    Yes if your builder’s fixed price contract includes all of the additional works and expenditure and then the lenders valuer agrees with the costings.

    Cheers

    Yours in Finance

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

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of ManuelManuel
    Participant
    @caferacer
    Join Date: 2015
    Post Count: 2

    If you are looking at doing a subdivision a bank will want to know what the total costs will be.
    They will then lend you a percentage of that amount.
    Once you have completed the works and the council have approved the plans the bank will consent to this and you can get the titles sealed.
    You need to be speaking to a banker/broker who has experience in this type of thing; I have seen so much go wrong with subdivision deals.
    Thanks

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