Construction Finance

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woodsman
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@woodsman
Join Date: 2004
Post Count: 714
February 21, 2004 - 11:32 am
Have just started to examine the possibility with my parents to develop the land in which their PPOR is on.
Essentially, the plan would be to demolish and build 2 townhouses, rent one out whilst they would live in the other.
Very rough numbers would be $500k to demoilsh and build 2 town houses, whilst the approx. value of townhouses would be in the vicinity of $550k each.
With construction finance, what sort of money is required to be put up front. 10, 20, 30%, more?? How does this vary with standard finance. Do financiers take into account completed valuation of 2 properties.
Any information to kick start my knowledge in this area would be great.
Thanks – James
Mortgage Hunter
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@mortgage-hunter
Join Date: 2003
Post Count: 3,781
February 21, 2004 - 1:31 pm
Lenders do consider completed values.
Do they currently own the existing land? If so there may be no need for any deposit.
If not you would be best with a 20% loan however less is possible with LMI.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
woodsman
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@woodsman
Join Date: 2004
Post Count: 714
February 21, 2004 - 2:14 pm
Yes, they own the land. Any recommended web-sites/contacts where I might be able to get more information on development/construction finance.
James
Mortgage Hunter
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@mortgage-hunter
Join Date: 2003
Post Count: 3,781
February 21, 2004 - 11:32 pm
If they own the land then you wont need a deposit.
Construction finance is just like normal loans except the bank releases the money to the builder at set stages after inspections.
Just talk to a broker and you will find it is very straightforward to set up.
cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
woodsman
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@woodsman
Join Date: 2004
Post Count: 714
February 21, 2004 - 11:39 pm
Thanks Simon
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February 22, 2004 - 3:23 am
So what is the property worth as is ?
Sometimes it is possible to subdivide the existing house into two apartments and strata title them.
Is there room to retain the existing dwelling and just build a second dwelling ?
Is the existing house a brick house or what ?
I assume that the zoning allows either flats or Dual Occupancy ?
Pisces