Finance for Strata

[MTR]

Hi all
I am currently looking at various options in relation to building at the rear of a property.

The property is currently secured with SGB, lo doc 80%LVR.

I am told that I can do a build, which is basically building the new property at rear and then go to Council for strata.

If I went this option I would need to use my funds which is OK, however I would then want the property re-valued.

Estimates - build $200K revalue should come in at around $400K.

How does this work with finance under current conditions, will I be able to get 80%LVR for value of back property?

This is really doing my head in.... any financial gurus able to help me.

Maybe I am looking at it the wrong way, hope it makes sense.

Cheers and thanks

MTR

 

[tobe]

ok, so you have $200k or so to do the build yourself, then you want to go back to the lender and get a new valuation?

Theres a couple of issues, your letter of offer usually states something about telling the lender if anything changes, and building at the back is a change they would like to know about, so you might want to tell them before you start the build.
The val afterwards should be ok. The valuer will value the property as is, that is, what a single title is worth with two houses on it. Once the property is strata'd the valuation will most likely increase.
Whether you can withdraw equity for a low doc re finance is another question.
It may be simpler to apprach STG to do a construction loan for the house at the back, and hold back your exisiting funds for another purpose, rather than try and get the equity out later.....
The process for this is, go to the bank with a contract to build the house at the bank, the bank gets an 'on completion val' and lends you in stages, 80% of the on completion valuation.

 

[Rolf Latham]

Hiya MTR

Are u looking for cash out on completion ?

Do u have Bas statements that "work" for you

ta
rof

 

[MTR]

thanks everyone.

Yes, Rolf have BAS

 

[bcoombs]

Tobe is on the right track. You have to get SGB permission to subdivide first. Once titles have been lodged you can then submit to them your building plans. I would also submit a rental appraisal and selling appraisal from a local agent as well. As a broker I also submit reports on comparative sales etc with the loan application. As Tobe said you maybe better getting building finance and keeping your cash. Go see an accountant for tax advice as he may say something like "second investment loan against new title". Then get an offset account attached to your o/o and put your cash against that.

 

[MTR]

thanks everyone, much appreciated.