Bank lending and valuation scenario

Viewing 3 posts - 1 through 3 (of 3 total)

ET
Member
@et
Join Date: 2005
Post Count: 12
November 28, 2005 - 2:39 pm
Hi, a question for all you finance gurus
We have recently signed up to build a house.
Mortgage on land component is 130K (Valued 330K)
Build Costs is 300K
So total borrowing of 430K. Our research indicates the property will be valued conservatively at 750K on completion.
Timeframe to completion will be 65 weeks.
Within said timeframe, we will come into some ‘extra’ cash to the tune of 50K.
Which leads to my question, would we be able to borrow against the home under construct for another property or would we need to wait for its completion?
Many thanks
sle
Member
@sle
Join Date: 2005
Post Count: 19
November 29, 2005 - 6:08 am
As I see it, utilising an “incomplete” property as security would not be achievable as the bank is putting itself at even more of a risk should for some reason your house under construction is not completed.
Mobile Mortgage
Member
@mobile-mortgage
Join Date: 2003
Post Count: 913
November 29, 2005 - 8:24 am
Hi ET,
You have a fair amount of equity available in the land component, Another option to consider:
Current land loan $130K against $330K value
Construction cost $300K
Approx. end value $660K
Borrow @80% of completion = Approx. $528K
Minus $130K current debt = $398K
Minus $300K construction cost.
= $98K available.
A higher figure is obtainable If you were to increase the LVR, I hope this helps. Cheers.
Regards
Steven
Mortgage Broker
Mobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.au
PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.