Borrowing to subdivide

[strongy1986]

We have a block we would like to subdivide in the future. We have the money to do it now.
Personally I would rather use the cash to fund more IPs which we will rennovate. In theory we should still have equity available down the track with rennovating

But worse case scenario - we don't buy well and don't make equity of a renno, would we be able to borrow money to subdivide our block and sell of the vacant land? Assuming no equity in any properties

 

[Terry_w]

If the lender knows you are going to subdivide they may treat it as a commerial deal. But if you were just going to buy land the normal rules apply - 90% LVR is possible.

You then get the sub-division ready and ask for the lender to produce titles.

 

[knightm]

Assuming no equity in any properties

Well the brokers can comment but if you have no equity in any properties its might need to be a personal loan.

 

[Corey Batt]

Standard fare is to draw equity from another property to fund the development, else use cash.

Lenders won't stump up subdivision funding without adequate security to draw from, the exception being larger scale commercial developments.

 

[Qlds007]

Depending on the initial lvr and subject to serviceability you could always look at the Adelaide Bendigo Bank loan ran thru their mortgage managers lined to a 20K secured visa card at home loan rates.

The max lvr has been dropped to 80% lvr but still if the coat fits it is worth thinking about.

We did so many deals last year at 100% lvr with this product for clients wanting to do exactly what you are describing.

Cheers

 

[Jamie M]

Standard fare is to draw equity from another property to fund the development, else use cash.

+1

That's the way we usually approach.

Cheers

Jamie