"Subject to getting a suitable development approval, in that should I need to, I could deem ANY development approval unsuitable and walk away. It needs to be noted that wouldn't be my intent, just a security blanket"

Thats exactly what an option is designed for, so you have an out. I certianly wouldn't sign a contract with that clause  in it. Would you if you were the seller? It basically voids the whole contract at the buyers whim and makes the whole thing not binding…so is legally pointless. Stick with an option any decent property solicitor would be able to draft you one for a few hundred dollars.

If you are dead serious about the potential of a property and your intentions are to buy it you can afford to offer a good price for the vendor to accepy your option say 2% of the properties current value rather than a few thousand $$. If they are thinking of selling but are apathetic either way they may accept as is a no risk stratergy for them.

If it’s a company borrower no responsible lending law applies. That said you will need to cap at 70% lvr max and you will struggle with the condition of the property to get the finance IMO. What about say a 30% lend against the as is value with the vendor providing a second mortgage for the 70% + costs that is payable in 1 years time. You might get it at that lvr and use the loan funds from the new 1st mortgagee to develop and then sell. Might be possible if the vendor has no or little secured against the propery currently.

Hi,

You need to find out what sort of development would be allowed on the site. As a general rule of thumb for a site to stack up divide the current value by 3 and times it by 10. So say site is worth $1,000,000 now it would have to be worth say $3,333,333 as end stock. If council would allow say 5 townhouses on the site you need to do due dillegence on local stock to see whether you could get $666,666 each. Very rough guide but if it looks like it would work then you could.

1) market it as a development site without da

2) get da approval and market as site with da

3) get da approval and build it

cheers

Hi Kev,

I have a few developement lender contacts also. No presales required and capped interest for the right deal. Happy to have a look at it for you as well. Please include GST in all costs and realisation figures for me thanxs.

Link to my development finance page.
http://mortgageexpertsonline.com.au/development_finance/development-finance.htm

Cheers,

Westpac canned their 85% no LMI ages ago
ANZ canned medical practioners package about 2 months ago

There are still 2 reputable / competitive lenders who offer 85% no lmi on certain deals both are foreign banks.

Adelaide bank have gone the other way though and just require a very non binding declartion by the accountant.

Hi TLP,

Your first option may be possible however you would have to buy the prop first, then after settled you could use a licensed contract builder to do the reno. A lender will only take the improved value from the reno into account if you are using a builder, they wont use the "as completed" valuation if you plan to do the work yourself. The risk with this is, you buy the property go to the trouble and expense of getting plans approved and then engaging a builder but in the end there is no gurantee that the bank's valuer will agree that you have added the $100K value.

If you plan to do the work yourself there are three solutions I can think off..
1) put in as little of your deposit as possible and borrow 95% +LMI…use the remainder of your deposit to fund the renos.
2) If you have a relative who would be a gurantor for you short term you could borrow the whole purchase price use your funds for the reno, get revalued and hopefully have enough equity to release the guarantor and avoid the dreaded LMI. Again there are valuation risks.
3) Borrow $100K from family to fund renos…dont like this though as what if you cant refi and or valuation doesnt stack up for whatever reason.

Cheers + good luck

Hi,

If your sitautaion is not too complicated then I would consider ING if I was looking for a loan myself at the moment. Good service, good rates not too many fees + $1000 rebate offered at the mo if you refinance and open a transaction account with them.

Other non big 4 lenders to consider could be Suncorp, AMP (bad service at the moment due to very cheap fixed rate but usually competitive), Newcastle Permanent Building Society (if yoiu live in the area)….+ a few others..

Where are you based?

Cheers,

Hi Nick,

It probably would be feasible however as a risk V reward I wouldn't buy off the plan with your equity levels. If the market has even a small downturn between when you exchange and when you need to settle you may be left with an LVR that is unacceptable ie over 90%.True there are some lenders who will go to over 90% (up to 95% max) for investment but only a few…so what happens if that changes and or you don't qualify with those lenders at the time you need the loan.

You also have the valuation risk that the valuer thinks you paid too much or that they think the whole complex is over valued as compared to others in the area. Again LVR issue comes into play.

I think that you need to have at least 20%- 25% equity before buying off plan…but just my opinion.

If it wasnt off plan then I would say go for it as you can control the financing risk.

Cheers

Hi,

Yes sounds off to me… as has gone up in value I am assuming it was not a low doc originally?

Why are you refinancing is it to get equity / cash out? The purpose of the loan may be the issue..

Cheers,