Bank valuation

[blackenator]

Hi All ,

I am currently waiting for my land to register for a new estate in sydney south west region I purchased my block in the 2nd release and stumbled on the new price list for the area and had seen my block has increased in value by 30k. I have also been looking online and also seen house and land packages that would have the same specs as my house and land going for about 70k more then I am going to pay.

I wanted to know since it is a new estate with no houses around it except for acerage properties how will the bank value the house?

 

[Aaron_C]

With great difficulty. They will have to take sales from a bit outside the area to justify the price, so be careful.

 

[Rolf Latham]

Typically, vals will come in significantly lower for resales.

many valuers dont ascribe any "real value" difference to a home being new or being 7 years old say, whereas an owner occ consumer can see the value spread of 50 k

ta
rolf

 

[Rockstar]

I wanted to know since it is a new estate with no houses around it except for acerage properties how will the bank value the house?

Normally they will value it as building contract price + price you paid for land. Once the house is built it will value based on surrounding sales. Sounds like you will gain some equity but there are always extras like landscaping, etc.

Are you borrowing money for construction only?

 

[Aaron_C]

Normally they will value it as building contract price + price you paid for land.

Well the bank valuer actually values the construction loan based on comparable sales for the end product...so the end value still must stack up even though it is usually a rubber stamp.

 

[Rockstar]

CBA didn't for me a few years back. Maybe times have changed and they've come to senses. Valuation post development was much better.

 

[blackenator]

Normally they will value it as building contract price + price you paid for land. Once the house is built it will value based on surrounding sales. Sounds like you will gain some equity but there are always extras like landscaping, etc.

Are you borrowing money for construction only?

Unforuantley not I am first home buyer with limited savings I saw this area (leppington) was cheap at the first release and decided to put a down payment to secure the land and price. My lvr is about at 90% I am going to live in it for 6 months then get the fhog then rent it out as I am still boarding at home. I am hoping to have a bit of equity to pull out to purchase another but I will have mortage insurance again if I do... So I am in a bit of pickle

 

[Aaron_C]

Well blackenator you should get a pre-application valuation done first as you are relying heavily on the valuation to come back OK. Don't want to waste precious time with a dud valuation.

 

[Rockstar]

So I am in a bit of pickle

Well as long as the bit of pickle is not too deep you should be ok. Sounds like a good strategy to get ahead.

How is your feasibility stacking up?
What is the total project cost vs expected rental once you move back home?
Interest rates are great at the moment. What rate did you get and are you going to fix long term?

All the best with the big jump you are taking.

 

[blackenator]

Well blackenator you should get a pre-application valuation done first as you are relying heavily on the valuation to come back OK. Don't want to waste precious time with a dud valuation.

Thanks Aaron, currently getting that done right now as I am going for my formal aproval for my loan and its confusing how they will value the house and land as it will effect my lmi cost

 

[blackenator]

Well as long as the bit of pickle is not too deep you should be ok. Sounds like a good strategy to get ahead.

How is your feasibility stacking up?
What is the total project cost vs expected rental once you move back home?
Interest rates are great at the moment. What rate did you get and are you going to fix long term?

All the best with the big jump you are taking.

The total price I am looking at is about 480k . The rent in area would be about 500 a week min. Take away 15k for the fhog and the stampy duty.

I'm not to sure yet on what the plan is in regards to going fixed or variable. I have the mindset agressive and have no other expenses and am earning about 80k a year.

 

[Rockstar]

The total price I am looking at is about 480k . The rent in area would be about 500 a week min. Take away 15k for the fhog and the stampy duty.

I'm not to sure yet on what the plan is in regards to going fixed or variable. I have the mindset agressive and have no other expenses and am earning about 80k a year.

You're in no pickle at all. Just keep it steady and sensible and live within your means. Good to be positive but don't get too aggressive!
All the best with the finance.

 

[blackenator]

You're in no pickle at all. Just keep it steady and sensible and live within your means. Good to be positive but don't get too aggressive!
All the best with the finance.

Thanks Rockstar