Maximum borrowing amount - feasible and good idea?

[serrz]

Hello

I am looking to buy a property and put a granny flat in the back. I would like to borrow the maximum amount where possible.

Say assuming the following:
House price = $400k
Granny flat = $100k (fixed price contract)

Total cost = $500k

My questions are:
1) Has anyone had experiences of being able to borrow up to 95% of the total cost (i.e $475k)?
2) How would such a loan be structured? $380k to purchase the house and $95k line to drawdown on construction of the granny flat?
3) Can I also borrow against other purchase related costs (eg lawyers fees, LMI, buyers agents fees etc)?
4) Is it best to speak with a broker to arrange all this?

My thinking is to borrow as much as I can and then place any excess funds I have in an offset account, to give me flexibility for the future.

Thanks!

 

[Aaron_C]

1) You can only borrow 95% of the house+granny flat cost or the post-construction valuation, whichever is the lower (if it is a construction loan). But in many cases the cost of the house+granny flat exceeds the valuation of the completed project.
2) It depends. Could be like how you describe.
3) No. You can only borrow against the property itself and use that money to pay soft costs like LMI/lawyer fees if you want to.
4) Yes, definitely.
4)

 

[jonmardell]

regarding the construction of the granny flat you will not be able to get a line of credit to manage the draw downs yourself. It will be a construction loan with set progress payments. Because you will most likely not have the fixed price contract in place at the time of settlement you will have to do a loan of 95% against the purchase and do another progress draw loan. The mortgage insurance may be able to be capitalised up to 97% but they other fees you will have to pay for.

Hello

I am looking to buy a property and put a granny flat in the back. I would like to borrow the maximum amount where possible.

Say assuming the following:
House price = $400k
Granny flat = $100k (fixed price contract)

Total cost = $500k

My questions are:
1) Has anyone had experiences of being able to borrow up to 95% of the total cost (i.e $475k)?
2) How would such a loan be structured? $380k to purchase the house and $95k line to drawdown on construction of the granny flat?
3) Can I also borrow against other purchase related costs (eg lawyers fees, LMI, buyers agents fees etc)?
4) Is it best to speak with a broker to arrange all this?

My thinking is to borrow as much as I can and then place any excess funds I have in an offset account, to give me flexibility for the future.

Thanks!