Well first of all, do you know if council allows you to build 4 townhouse on a 400 m2? and is it zoned correctly ?

Regards
Michael

To fix the rate will cost you $600 as an existing customer- paper work and re-application fee ( needs to get access by credit again- but you should pass easily )

The CR is the true value of the loan and rate, generally speaking a CR for fix loans only “looks” higher because it’s based on 25 years; and after your fix rate finishes homeside automatically place you on their standard variable rate which from memory is 7.7% that’s why the CR for homeside fix looks ridiculously high.

I dont know of anyone that would go on SVR after a fix- you would either go on homesides special rate or re-finance out to a different bank, simple….so if you need go for a fixed for 3 years on 6.54% and then back to discounted VR after the 3rd year of 7% then the CR for this “scenario ” is 7.03% roughly off the top of my head, dont quote me tho lol.

Also what LVR are you on?? 80-90%?

Regards
Michael

From the bank’s point of view the rent you pay of $1,1000 is still a liability until you finish building because you need a place to live during this 9 month ( not the case with all bank’s though- so are willing to take on end debt as long as you have enough funds in savings to pay for 9 month i/o)

Regards
Michael

That’s right, construction loan is paid as progressed payment, you start paying the mortgage once you get your 1st set of payment, so over the 9 month period, you will start with a small part of the loan/mortgage and it will increase as the bank release more funds.

There are normally 6 stages…The % is the % of the total loan cost.

1. Preparation — 5%
Plans, permits, connection fees, insurance, driveway crossings and soil test.

2. Base -12 %–
Concrete slab complete or footings and base brickwork complete.

3. Frame–10%—
House frame is complete and approved by building surveyor/inspector.

4. Lock-up—21%—
Windows/Doors ,Roofing, Brickwork, Insulation

5. Fixing–39%—-
Plaster, Kitchen cupboards, Appliances, Bathroom, toilet, laundry fittings/tiling, Heating
Fixing/internal doors etc, Plumbing,Electrical, Painting

6. Completion—13%–
Fencing, Site clean-up, Supervising builder

—

Yes you will have an issue if you declare as investment …you risk the OSR rejecting the FHOG.

—

It sounds like you have a serviceability issue, and that’s why the bank is declaring this as an IP as well- to let the “potential rent” kick in….i think you need to either;

1. Re-work your budget,if you can’t afford a $355 loan
2. Work with an experienced broker or ask different banks, as each bank looks at serviceability differently— especially over time etc…

Regards
Michael

As Jamie mentioned, you need to apply for a deposit bond, as a equity release takes 1-2 weeks ( to access the funds)…and no you don’t need to dip into the savings.

Regards
Michael

As Richard mentioned, more details plz.

Size
Loan amount?
LVR required?
Zoning
Postcode/location ( address if you really want)
Full doc or Low doc loan?
Whats the use of the land? farming? vacant?T constru?
What do you mean by short term accommodation ?? ( Campervan?)

Regards
Michael

Aim big…but start small, your planing with thousands of $$ so take it nice and slow

Do some renovations before development for sure…it will help you understand how the full deal works.

Regards
Michael

No, sorry mate… The bank still looks at it as a risk and liability. Newly self employed company makes it even worst.

Owners build- under 75% LVR….could be as low as 65% if you have no exp
Registered builder- 95% LVR

Regards
Michael

Generally speaking you can get a LVR up to 95% for the COMBINE land and construction cost, so really 95% land and 95% construction…so your 10% on the land is enough at this point if the land cost the same as the construction etc…

Having said that you must have a really good credit file and genuine savings + solid income for a 95% LVR….95% LVR for construction is a lot hardier then a established home.

Regards
Michael

Firstly nothing wrong with an +clashflow property..i mean if it makes money why not? BUT cash flow isn’t the full juice of the deal; you need to look at the overall deal and capital gain ( where the real money lies) if the deal is so good why havnt it been sold yet? a few factors to look at it..

1. How easily is it to offload/sell – whats the average days on market for this area— this will determine what sort of capital gain to expect
2. Do you need a cash flow property in your current portfolio ?- are all your another IP cash flow as welll? do you have a cash flow issue?
3. This next point is debatable, but i believe the real value and wealth lies in capital gain and cashflow/rental yeild property is there to support the “capital gain property” to give it time to grow etc… so where does this property lie in your overall strategy?
4. Flood issue- this will be a deciding factor; bank will not finance it if it has a flood ratio of less then 1:50 + valuation will be an issue as well, not much of an cashflow if you need to use all your deposit or buy it at a low LVR of say 50%….
5. Insurance issue- as noted above
6. Tenancy- what sort of tenants do you get? how long? is it controlled by a company? how stable is this company and industry?

Remember your risking an ~$40,000 punt (~ 20% deposit) to make $70 p/w without capital growth gonna take a while to get your money and return back.

Regards
Michael