Hi pks

I might have read your post incorrectly.

The way I read it was that you were going to reconfigure the layout of a two story townhouse.

But now it looks like you’re planning on extending upwards? Is that correct?

Cheers

Jamie

I would have just said “subject to finance” – but I’m sure Tracy has a good reason as to why a particular lender should be stipulated. It could be due to the word “finance” incorporating a broad range of lenders in which you’d have to be knocked back from instead of just the one.

Cheers

Jamie

The $320k figure from Duckster was the amount the original poster could “top-up” to if borrowing 80%. That was derived from $400k *0.8

If the OP wanted to access equity in the property valued at $400k – and were able to increase the loan to 90% LVR they’d have access to approximately $40k (assuming they used cash for their renos and haven’t already added this figure to the $320k loan).

The $40k is derived from:
$400k * 0.9 = $360k (which is loan at 90% LVR)
$360k – $320k = $40k

There will be some fees, LMI, etc that will alter the end figure – but this gives you an idea.

If he sold the property, CGT would be payable because it’s an IP (I don’t think he mentioned anything about a PPOR).

Cheers

Jamie

Hi Pks

The main question you need to ask yourself is “will it add value?” – you’ve mentioned that you’re going to sell it in a couple of years – have you considered other ways of improving the value at less cost? This doesn’t sound like an affordable renovation – and at the end of the day, if you’re left with a 3 bedroom townhouse (albeit with bedrooms up stairs rather than down) then I can’t really see how this will dramatically improve the value of the townhouse (and if you’re spending large bucks on a reno, you would really want to see a large increase in value).

You may need to consult with your body corporate (if applicable) as well.

Just my 2 cents.

Cheers

Jamie

Same here in Canberra. It seemed that the market made a bit of a jump in January but has slowed down a little since. In fact, Herron Todd White have categorised the stage of the property cycle in Canberra as ‘declining’ – this is a contrast to the “rising market” status it has been granted over the last few months. The most recent HTW report is available here for anyone interested – http://www.htw.com.au/Month_in_Review/Month-In-Review-February-2011.pdf

Cheers

Jamie

My thoughts as well. It’s impossible to predict. What happens if growth goes backwards or stagnates? I recall seeing a story about something similar on one of the rubbish current affairs shows.

Carry out your due diligence and tread carefully.

Cheers

Jamie

Depending on the lender you can generally go up to 90% LVR – some LMI would be payable.

Cheers

Jamie

If it’s valued around the same as the other properties and comes with the extra living space – then it sounds good. How was the workmanship on the extensions? Do they look professional? Can that study be converted into a 4th bedroom? This could result in higher rent.

Cheers

Jamie

The boss may be the only person with authority to operate the trust account. In any case, it’s rubbish – call them today and demand your refund – it’s extremely unprofessional on their behalf.

Best of luck.

Jamie

If you’ve carried out a fairly large reno that you believe has added value – you’d expect your lender to carry out a revaluation at your request. If they’re not interested in carrying one out – then they’re not a lender that’s conducive to your goals. I had a client, who many years ago went direct with a “painful” lender, who refused to carry out a valuation on this newly renovated property because they had a backlog of work and simply didn’t see it as a “priority” – in this instance, it was simply time to move onto another lender.

Cheers

Jamie