Afternoon all,
Looking at buying a smallish subdivided block that has plans and permits approved in Jan 2010.
I have spoken to a few builders and determined that I will start building as soon as the land settles should I purchase.
So my question is…
I will make an offer seeking a loan at 90% LVR.
I will have a fixed price contract for the build (it's a 14sq standard 3 bedroom home)
What happens with the funding for the house, do they lend against the future completed value? Or will I need to provide another deposit?any advice appreciated.
Cheers
Hi Pwinne,
Most Banks will lend you the 90% (plus Mortgage Insurance) on both the land and the building. Basically this means you will need to come up with a 10% deposit for each (plus cover the Govt fees on the purchase of the land).
Construction valuations generally come about by adding the land contract to the building contract and the Banks will then lend you the 90% of the total of the two.
Example:
Land Contract – $150k
Build Contract – $200k
Total Contracts – $350kTherefore the Bank will lend you your 90% of the total of the contracts = $315k.
Hope this makes sense!
Kind Regards,
Matt.
Hi Matt,
Thank you, that has answered my question.
Cheers
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