HELP-Construction Finance needed for 3 new houses on same block.

[Nona]

I am embarking on a small development in CQ- adding 3 (subject to council approval) new houses (hopefully standalone) onto a residential block of land with the existing house remaining.

The plan is to strata title them however have been told this can't be done until the houses are built (building format? survey). This would be no good for finance as last I heard is that banks wont' lend for more than 2 houses on one title (without going into Commercial territory).

Are there any banks allowing 4 dwellings on 1 title under residential lending?? that would be the easiest way around this?

If not is there a way I can sub-divide the land first and have titles issued for each strata'd block of land?? I know you can buy strata titled land in Perth. Would this be community title?

If anyone on here has experience with this can you please help me!

Many thanks
Fiona

 

[Mick C]

Nona - 4 units under one title and constructions loan as well...very tricky.
If it's 3 under one title and construction it will be possible with ANZ...but 4 it will be the commercial side of things.

You be better off to Sub divide the land first then start the construction;
1. Finance is easy- access to a range of lenders= better rates.
2. If funding cost goes over budget you can sell off one part of the land and continue...better protection
3. From experience hardier and more costly to sub land after all 4 are built; imagine if the builder left something important out that was required for the subdivision approval!! ( yes this happened to us )


Regards
Michael

 

[oc1]

The plan is to strata title them however have been told this can't be done until the houses are built (building format? survey). This would be no good for finance as last I heard is that banks wont' lend for more than 2 houses on one title (without going into Commercial territory).

Are there any banks allowing 4 dwellings on 1 title under residential lending?? that would be the easiest way around this?

The sooner you get out of residential lending and into commercial lending the better (for developments). I just had a 5 unit site approved from the ANZ. Interest rate was 1.5% higher with a few thousand for the application fee. Big deal! After the development you just refinance to residential lending. Easy. If a broker can't do it for you then do the leg work and arrange a face-to-face meeting with a Relationship Manager. I have found this side of a banks department much easier to deal with.

 

[Nona]

Thanks for info Mick and Oscar. Oscar it's not so much the higher rate that i'm worried about it's the lower LVR (70- 80%) that I can't afford without first subdividing the land.
I'll talk to a surveyor but think I'll do chop the existing block into 2 new freehold blocks and have 2 houses on each. Will then Strata between the 2 houses on each block later on. To do the freehold block in stead of 4 strata is more expensive due to civil works but about the only way I can think of getting it over the line.

 

[Mick C]

Block of 4 - LVR of 70%
Block of 2-3 - LVR of 80%
Block of 1 each - 95%


** Above LVR is based on ANZ lending...it will be different is you have extra security etc....but that's the general run down.

Personally i say sub-division first offers far better protection and "safe" gap.

Regards
Michael

 

[Peter_Tersteeg]

I hate to disagree with Mick, but I don't think 3 properties on a single title is that hard under residential. It's certainly not something I'd consider ANZ for as they're very conservative, but there are quite a few lenders who will do 3.

In Feb we completed a proposal for 4 properties on a single block at a 90% LVR. Council approved plans were in place and the applicant had reasonably good serviceability. It wasn't the easiest deal, but we didn't need to sugar coat or hide anything to get it done.

Any more than 3-4 properties and you would be well advised to sub-divide before seeking construction finance. I made some enquiries a fortnight ago for 6 existing units on a single title with very unenthusiastic results.

 

[Mick C]

Feel free to disagree PT...that's what an open forum is for- learn and grow

Every "unique" deal is done case by case...i would hate to write" 90% LVR ok for block of 4" when in fact it's not part of "standard lending policy" but more of an exception. I rather under state

Regards
Michael

 

[Marty McDonald]

Depends on council. All have different rules. Some won't allow subdivision until houses are complete. I'd make council my first port of call and maybe employ a town plannner.

In terms of finance I agree with PT not impossible to do as resi.