Found a place need help with types of loans for construction

Hi All,

We have bought a place that has an existing house and enough land for 4 units.

What would be the best way to structure the loan?

We have to live in it for the 6 months to get the FHOG and it is currently tenanted by a good long term tenant. Are there any advantages to having the tenant stay there for a bit after settlement?

What is involved in getting a construction long for a 4 unit development? Do you still need the 20% or so down payment. We would probably keep 2 and sell 2 when they are done.

The existing house would have to be torn down to finish the front units.

Thanks for any suggestions.
 
Ok I will bite... Have a look at some of the threads on developing multiple units here, and you will get an idea on what you are up against.
In terms of the loan structure to purchase the property to start with, a good IO with offset I reckon.
When you have almost the same amount in the offset account as was in the loan, then its time to get planning approval to subdivide from the council and development approval from the relevant authority. During this process you will have gotten plans and specs drawn up, and it is these and the approvals that your lender will need to see.
In the current environment 4 units can be dificult as residential finance, and as you want to sell two, this qualifies the development for commercial finance. The commercial finance environment for first time developers is pretty much non existant at the moment, and would normally require 60 to 70% LVR and cash for capitalised interest during the building period....
 
Regarding the FHOG, you have to move in to the property within 12 months.

BUT, if you have a tenant there BEFORE you move in then you lose the CGT PPOR exemption for that period, and will have to keep good records.
Marg
 
if you are a FHOg buyer , developing long term might be good for you, but its a complete different kettle of fish, somthing you need to spend a year on what and how to do it, get the house first, and come back with specific questions, about your financial goals, to climb a ladder first it must be built, :)
 
Thanks all for the replies! Very helpful!

We talked to the finance people about what we are wanting to do and they didn't see any issue with it at all.
 
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