Oh yeah, also, is there any chance of capitalisation of the interest?  Or is that a pipedream?

Thanks for your time.

Ben

Thanks for your comments guys.  Very helpful.

I had been using $1,500.00 a metre – but thought I should I use $2,000.00 of the units, as I understand that units are generally more expensive.

In the market I am looking at there is a lot of competition.  Most people are building the smallish 2 bedders, with high density.  This is fine as it is a price concious market.  However, there should be a market for something a little better as well – the site is in a good position and the final product will present well from the street.  I guess I have got to look at what the market is for those units that are slightly better and what it is actually going to cost to get them up.   Are you talking $1,500.00 for the entire square metreage of the build or just the GFA of the units?  It seems that people use different figures. 

I appreciate your comments, I have looked at a lot of plans over the last few weeks and I appreciate the comments regarding wasted space, it is amazing how poorly some of the places are designed.  I am fortunate to have a good architect, so this should not be a problem.

Hi All –

just an update – my broker hit up the CBA for a further reduction and they have given us 0.95% off the standard variable, which takes us to 6.61%, which seems good.  This is 0.25% reduction from where we were and with the RBA cut we are now 0.50% down from where we were last Monday.

6 – 2 bedders – on market in 6 months – off the plan would be helpful – $350plus.

Thanks for your comments Richard – and everyone else too.  I guess my position was that I really didn't have the equity in my PPOR (that I wanted to touch anyway) to allow me to take out the second loan on it – though I see what you are saying now in relation to thinking a little creatively.  I am sort of pretty entrenched with my current broker for various reasons so cannot go changing at the moment.  Though Richard I will certainly keep you in mind!!

One positive though, is that I emailed my broker regarding my rate and he has told me that he has already put in a request for CBA for the interest rate to come down.  So fingers crossed!

Thanks

Ben

i am not sure I understand the cross thing.  The issue was that I had $100K available by way of redraw in the PPOR.  I didn't want to put up any cash for the IP, so I borrowed 100% plus costs.  To borrow 100% plus costs on a stand alone basis I would have had to pay LMI.  By providing my PPOR as security for borrowing for the IP I was able to avoid paying LMI as the amount of the amount of the loans was less than 80% LVR overall.  I don't see there is any other way I could have done it.  If someone can explain it to me (perhaps they have and I just don't get it!!) than that would be great.

Thanks

Ben

hey swampy – thanks for the reply.  So why don't they just make them two titles? Surely a developer would make more selling two apartments rather than one apartment with dual key? Plus wouldn't the tenant rather not have a common hallway – just have their own apartment?

hey everyone

thanks for your comments.

Allistair

I will keep an eye on the line fee – tks for the clarification re GST.   I had been advised differnt things by different people as to whether the 70% is the end product plus GST or not.   Just to clarify you say that the CBA will only lend the lower of 80% of costs or 70% of end value – which ever is lower.  So if the project is going to say costs $1 million, they will only lend $800K is that right regardless of end value?  I had thought that if the project was going to cost a million and the end val was say $1.4 million that they would lend me basically the full million is that not right?

Michael

I see your point re the change – I guess I had naively thought that once construction had finished that I would simply be able to convert the loan to the normal loan and obtain the usual interest rate – is this not the case?

Richard

I am happy to go with a resi loan, but the broker reckons that because there will be four units once constructed that the banks will only look at as a commercial loan. Is this not your experience?

Thanks very much for your time.

Cheers

Ben