Hi All
Just wanting to know if we have a house on a block of land we want to develop (3 townhouses) and instead of demolishing it to develop the land, we would be moving it onto another block in the area. Would we have to pay down the loan to land value before we could move the house or would the whole loan need to be paid out before going ahead with the development?
Or are there other options?
Richteddy
If I was you I would hang onto the house if it is not in the way and rent it out to help cover holding costs. Then apply for sub division as this will take some time to get approved by council. Also when you subdivide the bank will not be happy that the land value has decreased by 66% on the secured loan.
You will have to talk to the bank and most likely secure the loan across the future three newly created blocks of land and have it revalued based on three separate parcels of land.
Depending on the acceptable loan to value ratio you may find the three separate blocks of land will keep the LVR at the right level.
Loan to Total Value
(Loan divided by (land value 1 + land value 2 + land value 3 )) X 100
Otherwise you may have to pump cash into the loan to increase the LVR if the House is removed.Hope this makes sense !
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