If you make cosmetic or structural changes to a property during contract (by way of unconditional access cluases) when will most banks recognise the increase in MV and provide finance at the relevant LVR?
Similarly, if you increase the rent by say 50-100%
1. Does this have an effect on the MV (i’ve heard it does but not for 2 years)
2. When will most banks recognise this?Example situation – My strategy is to purchase properties suitable for a conversion to student accommodation. I change the floor plan of a suitable property from a 3 bedroom to a 4 or 5 bedroom, rent each room individually and in total double the rent the property was receiving previously.
I have been told banks have a stand-off period between valuations which is generally about 4 months. If this is correct, could this be done with a 4 month contract to purchase, and providing it was done right finance it 100% at close of contract [?]
Mornin’ Leigh
our experience is that the contract date is the START of the waiting period for revaluation. However, having said that, 3 Lenders we have talked to have all said that the valuation will age in 3 months (not 4) and so we just have to have the cash for 3 months :o)
Note: we have been told that it is good to do at least something to the property to increase its’ value, I mean it makes sense too as you will be able to amortize your upgrade costs, before getting reval and applying for upgraded finance.
There may be a way round this however if the settlement is long enough. We have a couple of deals on the books where we may get in excess of a 9 months settlement period. In this instance one lender has said that that they might (and I stress the might) look at doing finance based on valuation at purchase as the original val (from when finance was approved) will be too old.
Hope that helps [
]cheerio
the B
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