Hi all,
so, we made an offer on 9.5 acres which is subject to finance and I expect that will all be fine. Now call me stupid but I had not looked fully into the way the bank will calculate the next part of the finance which is the finance for the build itself. I have been using a broker and he has explained it a few times and it all sounds ok but I still do not fully understand it.
Am I right in saying that the lender will look at the land and also the plans that are agreed with the council and then work out the assumed final value once the project is complete and then base their decision to lend based on this little lot. Will they also decide on the amount they will loan based again on the final value and assume the LTV based on this also?
In my example, I have paid $350k for the lot. I anticipate around $300k for ground works and build giving a final valuation of around $750k based on previous sales in the area. If this is correct and the LTV was say 90% and I had to find 10%, would my deposit be $25k? This seems way off since I have been asked to find around $61k by the broker.
My calcs are these. $750k final price. LTV would be 90% of that so I would have to put in $75k if I was borrowing the full $750k but since I only need $650k the LTV would be 86.6666%.
I definitely need this explaining in a text I can refer back to many times until I get it if anyone wouldn't mind taking the time to do that.
I live in WA as well if anyone wanted to know for the stamp duty etc. I am being told I need to find $51k to buy the land alone but a lot of that would go towards the build finance as well. I will have to fork out the stamp duty until I get a slab down at which point I would get a lump back for the stamp duty although I would not get all of it back since I have gone over the $300k for land alone exemption. I should add at this point that I am a first time buyer so I will qualify for no stamp duty and also I will be given a grant of $10k, but again, this is once the slab has gone down so that has been calculated into the finance as well....
Is it a wonder that I do not understand this? Ok need to go lie down now...
Hoping you can help.
so, we made an offer on 9.5 acres which is subject to finance and I expect that will all be fine. Now call me stupid but I had not looked fully into the way the bank will calculate the next part of the finance which is the finance for the build itself. I have been using a broker and he has explained it a few times and it all sounds ok but I still do not fully understand it.
Am I right in saying that the lender will look at the land and also the plans that are agreed with the council and then work out the assumed final value once the project is complete and then base their decision to lend based on this little lot. Will they also decide on the amount they will loan based again on the final value and assume the LTV based on this also?
In my example, I have paid $350k for the lot. I anticipate around $300k for ground works and build giving a final valuation of around $750k based on previous sales in the area. If this is correct and the LTV was say 90% and I had to find 10%, would my deposit be $25k? This seems way off since I have been asked to find around $61k by the broker.
My calcs are these. $750k final price. LTV would be 90% of that so I would have to put in $75k if I was borrowing the full $750k but since I only need $650k the LTV would be 86.6666%.
I definitely need this explaining in a text I can refer back to many times until I get it if anyone wouldn't mind taking the time to do that.
I live in WA as well if anyone wanted to know for the stamp duty etc. I am being told I need to find $51k to buy the land alone but a lot of that would go towards the build finance as well. I will have to fork out the stamp duty until I get a slab down at which point I would get a lump back for the stamp duty although I would not get all of it back since I have gone over the $300k for land alone exemption. I should add at this point that I am a first time buyer so I will qualify for no stamp duty and also I will be given a grant of $10k, but again, this is once the slab has gone down so that has been calculated into the finance as well....
Is it a wonder that I do not understand this? Ok need to go lie down now...
Hoping you can help.