Getting tricky... or crazy...

[--(< PJ >)--]

Hi again folks,

I'd like to run something past you. I'm considering some mischief. I searched for threads on this, but found few discussions. So here goes...

I have the opportunity to build a 1bed house, with the prefab itself for $20k and the stumps for $2600. Stumps & connection to utilities I can pay in cash. I have full Res A approval in writing from the council - all feasible & legit/above board.

The bank would treat it as an owner-builder construction finance, because of my procurement method = 75% LVR. Pointless. The current state of the market isn't amenable to a revaluation of vacant land for finance, and it isn't a lot of money so... I'm thinking... my credit card limit is $20k. I don't use it.

I intend to pay for the prefab on the card (2.99% for 2mths deal) then refinance it into my portfolio later. Revaluation post-construction would help, but I have room to move in current LVR already in overall portfolio (but not the 75% LVR for owner-builder criteria).

Have any of you done this? If so, how'd it work out for you? (Yes, I know it's risky model.)

PJ

 

[HandyAndy888]

Kind of, but mine wasn't as complicated. Took out a personal loan (instead of the CC) and bought a block of land for $21,000. When it came to refinance the portfolio, it was integrated into one of the loans. Simple. Am wondering, that if when we sell it, if we can claim the personal loan interest....one for the accountant.

 

[--(< PJ >)--]

Kind of, but mine wasn't as complicated. Took out a personal loan (instead of the CC) and bought a block of land for $21,000. When it came to refinance the portfolio, it was integrated into one of the loans. Simple. Am wondering, that if when we sell it, if we can claim the personal loan interest....one for the accountant.

Hi HandyAndy!
Thanks for this. It's good to know you were able to absorb the loan into your homeloan. I'd totally be trying to get that interest down as a deduction.
Cheers!
PJ

 

[Propertunity]

Perhaps this thread will assist: http://www.somersoft.com/forums/showthread.php?t=34493

Cheers, Alan

 

[Sheryn]

This thread is also worth a look at...

http://www.somersoft.com/forums/showthread.php?t=23497

When you get into trouble how are you going to 'get yourself out of trouble?'


Regards
Sheryn

 

[--(< PJ >)--]

Thanks Propertunity and Sheryn. Interesting threads. I am already aware of the risks. I'm wondering about the mechanics of the refinance and such.

 

[tobe]

The mechanics of the refinance are pretty straightforward. You will have an unencumbered title valued at x, and the lender will lend you x%.

If you tell the lender the cash is to repay a credit card, the lender will ask to see statements for the past 3 months to see you have conducted it well.

You will need a certificate of occupancy, and the house will most likely need an internal floor space of 50 sqms (even though its a free standing house the minimum living area lending rules still apply).

 

[--(< PJ >)--]

The mechanics of the refinance are pretty straightforward. You will have an unencumbered title valued at x, and the lender will lend you x%.

If you tell the lender the cash is to repay a credit card, the lender will ask to see statements for the past 3 months to see you have conducted it well.

You will need a certificate of occupancy, and the house will most likely need an internal floor space of 50 sqms (even though its a free standing house the minimum living area lending rules still apply).

Hi ToBe!
Yikes! Good point. I'd forgotten about the floor area LVR restrictions. :-\ My little house would be under the 50sqms. Hmm... this could be an issue. I'll check with the bank.
Many thanks!
PJ