How to finance a granny flat.

[CarolInPerth]

I hope this is the right place to ask.

We are looking at borrowing 100k to build a GF and do some landscaping to the front of the property. We have 45% equity in the existing property conservatively valued at around 460k (last bank valuation was 4 years ago and was 500k so I've knocked 8% off).

Would we be borrowing against just the existing house?
It would then be a 24% equity.

Can we include potential rental income and increased property value in the application?

I have no idea where to start.

Thanks
Carol

 

[Rolf Latham]

I hope this is the right place to ask.

We are looking at borrowing 100k to build a GF and do some landscaping to the front of the property. We have 45% equity in the existing property conservatively valued at around 460k (last bank valuation was 4 years ago and was 500k so I've knocked 8% off).

Would we be borrowing against just the existing house?
It would then be a 24% equity.

Can we include potential rental income and increased property value in the application?

I have no idea where to start.

Thanks
Carol

HI Carol

If you have some form of income, and ur existing lender is 'normal" and teh gf will be built to council regs with a fixed price contract, you should be able to borrow 100 % of the cost..................

Yes, many lenders will include the rental income of the GF in their servicing, but not all.

A simple way is to draw an equity loan of 100 k on your home, that way you dont need to muck around with progress payments and can often get a better build price..............but not all lenders will play ball with "cash out"



ta
rolf

 

[Aaron_C]

For a low LVR it shouldn't be an issue at all as long as you service.

 

[CarolInPerth]

Thanks Aaron and Ron, I've been poking around online calculators and it looks like we have enough income (without any from the GF) to service a much larger mortgage than we have so with the existing equity we should be in good shape.

 

[devank]

Brokers here would know better. I think banks accept lower LVR if you tell them that it will be a dual occupancy. It might be better to argue that it is a an extension to the main house.