Gday Everyone,
I am looking for a bit more explanation on the 4 financing options that are outlined in chapter 15 regarding the Ballarat house example in the 0-260 book.
Option 1 – Is this just a standard 80% loan?
Option 2 – "The interest can be capitalised and added to the balance" Does this mean the interest is paid as a lump sump at the start/finish of the project?
Option 3 – Is this simply borrowing 85% of total project costs instead of 85% of the cmv? (Also, is this a common practice with lenders?)
Option 4 – Same as above but instead using the equity in your existing home to fund the other 15%?
Any help would be much appreciated.
CheersHI Grant
Havent read the book but understand the concept so will comment on what is currently available in the market.
1) 80% of cost would be available in the current climate Yes.
2) You wont be able to capitalise interest on a residential loan at an 80% LVR.
3) GRV is an accepted method however not at 80% LVR. No standard lender offers such and you are looking at private lenders so maximum LVR is likely to be around 65% depending on your experience, income, assets and any pre-sales.
4) This will go against you as it is borrowed funds but makes it possible to achieve would work.
Richard Taylor | Australia's leading private lender
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