Hey All,
I'm curious as to how lenders finance a knockdown rebuild.
Scenario:
Property Valued at 500k (350k land, 150k house).
Current Loan = 250k
Build Contract = 350k
Finished Valuation = 850k
Do they base on end valuation? So LVR would be 600kloan/850 valuation = 76.54 LVR
Or do they lend on the build contract which would then require 70k equity. If this is the case then the part I am unsure of is given the existing house would be destroyed then can they only release the equity based on the land value of the home?
Therefore meaning land value 350k, current loan 250k so only 30k in useable equity?
Sorry if i am confusing how this is actually done.
I'm curious as to how lenders finance a knockdown rebuild.
Scenario:
Property Valued at 500k (350k land, 150k house).
Current Loan = 250k
Build Contract = 350k
Finished Valuation = 850k
Do they base on end valuation? So LVR would be 600kloan/850 valuation = 76.54 LVR
Or do they lend on the build contract which would then require 70k equity. If this is the case then the part I am unsure of is given the existing house would be destroyed then can they only release the equity based on the land value of the home?
Therefore meaning land value 350k, current loan 250k so only 30k in useable equity?
Sorry if i am confusing how this is actually done.