Effect of subdivision on existing loan

[gooram]

We've got a mortgage over an IP which we are subdividing.

I understand that after subdivision and sale of the rear block, the bank will revalue the front house and land, and we will then be required to pay down the loan to 80%.

However, currently the loan is 90% LVR as we took out LMI. So, I guess my question is how does the LMI impact the post subdivision assessment? i.e. will we only have to pay down the loan to 90% of the newly assessed value?

Thanks for any feedback.

 

[Rolf Latham]

usually the lender will allow the loan to be take back to 90 %, assuming there is material change in the security, eg zoning changed from resi to comm etc

ta
rolf