P&N Bank for development

[Tano]

Me and my brother are looking to build a 4x2 on a block we bought a few years ago in High Wycombe (WA). The block is subdividable 890sqm R25 but we have not subdivided it yet. We have 4 joint loans with Westpac all setup by our broker and she has suggested we take one of our loans and a new construction loan to P&N bank since they are the "ONLY lender in the market that will lend against the end figure so it is an attractive bank to deal with when developing."

Is P&N the only bank that lends against end value or is there another way around this? I need 320k for loan for construction and renovate existing front house. Westpac will only lend $220k which is 80%LVR for all properties. Cannot get LMI since we are X-Coll (but we are working on unravelling it)

Thanks

 

[Aaron_C]

Other private lenders go off end value as well. Not cheap though. It may be better for you to uncross first and then fund the gap with your residential equity, even if it does take you a bit longer.

 

[Mick C]

I don't deal with Police and nurse credit union, but reading your post-
1. You have an existing house that you need to renovate
2. You want to build a 2nd home on the same land

if that's the case, than there are banks that will lend on the end "value" of a renovation loan- ie valued as per renovations quote/outcome + with your Construction loan will lend based on construction cost ( not end value as such - But this can be easily overturned with a "Refinance/equity top up" after construction )

Agree with Aaron, you def need to uncross so you can tap into some equity and be more open to diff options.

 

[Colin Rice]

P&N Bank have a very stingy calculator so would suggest you check borrowing capacity first.

As others have said best to unravel the spaghetti carbonara first.

 

[Tano]

Thanks for your replies.

High Wycombe = 450k existing house on 890sqm block
I need to get a 330k construction loan to build at back and fix up front house. The house is worth 450k now, but If I subdivide first I am sure the existing house will fetch 380k and the block of land 230k (376sqm effective). but I prefer to subdivide during construction if thats an option.

Any ideas on the splits suggested? Once split, if it wont work below 80% LVR then it shouldn?t matter because I will only pay LMI on the construction loan.

 

[Colin Rice]

but I prefer to subdivide during construction if thats an option.

You can;

1. build/strata - build first then strata afterward but val will be based on 2 dwellings on one title until sub divided. P&N will do this at end value but sounds like servicing my be an issue?

or

2. strata/build - sub divide first and get two separate titles then build so will value as separate existing property + land & construction.

 

[Rolf Latham]

P&N is a soft drink not a development lender

ta
rolf

 

[Colin Rice]

P&N is a soft drink not a development lender

ta
rolf

Lets hope its not all froth and bubble!

 

[jaylo]

I've been advised to have a go at PNB by my broker as well for a devo site.
By the looks of your answers it looks like there is some uncertainty in the air in regards to that new bank and former credit union.
If PNB goes bankrupt in the middle of my loan, what happens next?
Am I backed up by any ways?
On another note, would PNB lend 90% LVR now it's a bank or would they stay on a more conservative 80% as former credit union?
Cheers.

 

[Colin Rice]

Why PNB? Is it because they will go on end value for LVR reasons?

I cant comment on PNBs financial position and wouldn't anyway in a setting like this.

They will only go to 80% from what I am aware.

Homeside will go 95% for 3 units on one title if total money lent is sub 1 Mill under resi.

 

[jaylo]

Yes FMS that's mainly for the end value.
Also my broker is keen to give a chance to a small local bank on a lighter note.