I have the opportunity to purchase a property from my sister for about $150,000. I am currently living in the house on the property and we plan to subdivide the property and build a townhouse up the back of the block. I estimate it will cost about $170,000 to build the townhouse and prepare the land etc. I've used a draftsman and the plans have been submitted to council.
My question is – how much will the bank lend me? I have a 10% deposit on $320,000 – but I'm not sure if the bank will lend me the entire amount, or just the amount required for the purchase of the property?
The problem I can forsee is that the actual value of the land is significantly more than the $150,000. How do I approach the bank and get the required funds despite the property not being on the market? Do I need to tell them of my plans to build a townhouse and thats where some of the funds will be allocated?
I wasn't sure whether the banks lends against the market value of the property as is, regardless of my plans to construct.
Thanks in advance
Hi there
Hate to say the Bank in the current climate any lender will only lend against the purchase price or valuation which ever is the lower.
In saying this if you structure the loan correctly then there is no reason why you could fund the lot with the right lender.
Your mortgage broker should be able to present you with these options.
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
