Dear All,
Quick question and help please:We purchased a plot of land in an estate in one of the south east suburbs of Melbourne with the original plan of building a PPOR. We had taken a 80% LTV mortgage for the land. The land has just settled and because we are first time buyers we were not required to pay any stamp duty costs. Talking to a few volume builders, it looks like building our dream is going to a bit expensive(land+build costing us circa $850K!). We still have some spare cash that we were going to use towards our house build
So I am thinking of the following alternative:
Don’t build on the empty plot of land just yet, but buy an established home as our PPOR(which comes with a bigger plot of land for around $750-850K) and build a house on the empty plot of land or dispose it off after a couple of years.1) Do you think we can take a mortgage against the empty plot of land’s equity?
2) If we don’t build and live on the empty plot of land does it mean that we need to pay back the exempted stamp duty charges?Any help greatly appreciated
1) what equity? its at 80% lvr
2) yes very likely, although the government would only become aware of this when you buy another as a PPOR, then you may incur the Stamp duty.
In regards to your situation, seems weird you can buy a new place for 750 and not have to sell the land, but cant afford just the outstanding to build a house?
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone MeJPA Financial Services Pty Ltd
With house and land or construction loans – the lender looks at the total security and loans based on the combined costs/value est. For example if you bought a block of land for $300,000 and wanted to build for $500,000, pending a valuer agreeing on an end value at that price they would look at a total value of $800,000. From there you can borrowing against that value minus any existing debt. Assuming a maximum 80% LVR you would then be able to get a loan of $640,000 minus any existing loan on the property (the land loan), or you can go to 90-95% for an owner occupied build but will incur lenders mortgage insurance.
Paying LMI isn’t the end of the world if it helps you get you towards your goals. (building your own home etc)
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
1) what equity? its at 80% lvr
2) yes very likely, although the government would only become aware of this when you buy another as a PPOR, then you may incur the Stamp duty.
In regards to your situation, seems weird you can buy a new place for 750 and not have to sell the land, but cant afford just the outstanding to build a house?Hi Jaxon,
Thanks for your email
Yes the current land Mortage is at 80%LTV no LMI. I am told by my mortgage broker that I am eligible for Mortages upto 1M. We definitely don’t want to defraud the state or the government around stamp duty. So we will probably build a smaller home at a total land+build of around 700K(as we think that at 850K we are probably close to the ceiling of how much a 4 bedder could go up in value in the south eastern suburbs of melbourne). We live in in it for a couple of years for stamp duty exemption and grant and then possibly upgrade to a bigger homeOr you could look at getting planning approval to build a duplex (high end)
get approval even at a lower rate, do the development and sell the side duplex for profit. and come off far ahead
or a bunch or other paths
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone MeJPA Financial Services Pty Ltd
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