A friend of mine wants to subdivide his block into two, and I would like to purchase one of the lots. The block is just under 600 m2 so the subdivision would result in two lots just under 300 m2, so enough to build a decent townhouse on each (council allows 60% coverage). When speaking to the council town planner, he said that they do not allow sale of vacant land for lots under 500 m2. So, I understand the subdivision is approved when plans are approved but not registered until completion. Is it possible for me to obtain finance (a construction loan) to construct one of the townhouses, or, am I restricted to a normal purchase off the plan, i.e. pay a deposit, friend has to finance both town houses and I purchase one at the end. Plans are at the architect at the moment, and we hope to obtain pre-approval in the near future.
Welcome SJP,
Yes you can but there are restrictions, firstly you will need:
1. A solicitor to prepare a contract to say your buying this off the plan and the terms and condition …ie – if the building does not finish within 6 month or what ever the contract is void….end of the day there is a lot you can put into this contract, on yours and your friends agreed terms.
** make sure the subdivision and split title gets approved first ! OR you will have trouble with the finance….
2. Finance approval — this is the Tricky part! to be honest i have done this same deal in the past…but i haven’t done one in the last 6 month!! and the banks tend to change their policy and requirement quite often…SO i will change to check for you….you can email or PMS me more of the details-ie LVR, amounts, Location ( some postcode have restrictions) etc….and i can fund out.
If any another broker can answer this question in the meantime….please do
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Be careful mixing business and friendship. Good friends are hard to find.
Luke.
Luke- That is so true!!!
I have been burnt in the past, lesson learnt.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Thanks for advice Michael. The main problem, I think, is that there is effectively no title until the houses are finished, council will not allow sale of vacant land that size. So, as I understand it, council approves subdivision and plans, but the subdivision is not registered until completion. Am I incorrect, or, is there a way around this?
It depends on the council, i mean in my area ( NSW- hornsby) we are allowed subdivision of land and then construct is fine, as long as it meets the land size requirement etc…
If you can’t split the title prior to the construction- you will have a problem….the only way to finacne this IF the bank allows it…is to push both loans thru to the same lender. The deal must be presented well- if its to complex they wont even give it a 2nd thought!
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
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