Accessing Equity

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bmtt
Participant
@bmtt
Join Date: 2012
Post Count: 1
July 19, 2012 - 4:51 am
Hi all
Just bought a piece of land with the view to build our first IP. I believe we’ve bought below market value and am seeking assitance in minimising use of capital. Two questions:
1) Which banks will lend against the current market value of the land and not just against the purchase price?
2) Once we’ve decided on a builder which bank will lend against the market value of the completed house and land to fund the cost of building?
Your help would be much appreciated.
TheFinanceShop
Participant
@thefinanceshop
Join Date: 2012
Post Count: 1,271
July 19, 2012 - 8:57 am
bmtt wrote:
Hi all
Just bought a piece of land with the view to build our first IP. I believe we’ve bought below market value and am seeking assitance in minimising use of capital. Two questions:
1) Which banks will lend against the current market value of the land and not just against the purchase price?
2) Once we’ve decided on a builder which bank will lend against the market value of the completed house and land to fund the cost of building?
Your help would be much appreciated.
I wish on so many occasions it would be different but the bank (the valuer actually) will go by the purchase price. Even if you think you have purchased it for a bargain the valuer will not share the same thoughts.
Re your second question the valuer will value the property as per the end construction price. Most often the valuer will add the land value plus the construction price. Make sure that the builder is a licensed builder due to lender requirements.
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Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
July 19, 2012 - 9:05 am
Hi bmtt
Firstly welcome to the forum and i hope you enjoy your time with us.
All lenders lend against the current market valuation of the security where you already own the land or the lower of the purchase price / valuation where you in the process of buying the property.
In realty where you have signed a Contract the valuer is likely to value the security at the same price (Belive it or not this is a good thing these days as many are not valued at purchase price).
100% of construction price is available but will depend on the deposit you put down on the initial land.
Hard to be more specific with actual hard data.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender