Rebuilding a Mortgaged Property

[nev]

I'm wondering if it is Possible to demolish and rebuild a mortgaged property

 

[westminster]

I'm wondering if it is Possible to demolish and rebuild a mortgaged property

Yes if the bank gives you permission. They will want to see a building contract and value it before you can go ahead and demolish their asset.

 

[Aaron_C]

I'm wondering if it is Possible to demolish and rebuild a mortgaged property

Yes with their consent but some lenders don't like vacant land (after it is demolished) so make sure you check.

 

[Qlds007]

Also make sure you have enough available cash in case the Banks valuation is less than the current debt post demolishion and they a.sk you to reduce the outstanding loan

 

[Shahin_Afarin]

Quite normal and common:

1. You need a building tender (not just a quote from the builder)
2. LVR will be dependent on whether the build is through a licensed builder or whether its owner builder
3. Max loan amount and LVR depending on the postcode of the property

 

[datto]

What if you dont tell the bank.

 

[Shahin_Afarin]

And you build with pure cash and not borrowed funds?

 

[datto]

Yes. Say with equity from your properties. Shouldn't be a problem?

 

[Aaron_C]

Yes. Say with equity from your properties. Shouldn't be a problem?

Technically you'd be in breach of your loan contract but they know this happens all the time.

 

[datto]

Ah technical only. Bank should be happy because the value of their security has increased.

 

[Rolf Latham]

Ah technical only. Bank should be happy because the value of their security has increased.

unless you fall over at the time the excavator leaves...............

ta

rolf

 

[Aaron_C]

Ah technical only. Bank should be happy because the value of their security has increased.

Perhaps but prior to the house being built they are holding a security with a possible LVR of over 100% and which is vacant land.

 

[datto]

True but I would be holding a large amount of cash in their bank. I think if they dont know and everything goes smoothly , it should be OK.

 

[Waldo]

True but I would be holding a large amount of cash in their bank. I think if they dont know and everything goes smoothly , it should be OK.

If you're holding a large quantity of cash I can't see any downside in informing the bank? At worst they may ask for more money down which you can then get back out once the new building is down & valued?

 

[datto]

Yeah Waldo, I think you're right. Should tell the bank if and when I decide to go ahead.

Can be frustrating though as the banks ( and councils) always seem to make me "jump through hoops" whenever I ask for something.

"Come on Datto, now jump through this one, its only a little bit higher than the other one we gave you. Only two more hoops and we will consider your request "

 

[Marty McDonald]

People do it and if i had the coin i would probably do it that way too BUT make bloody sure you have enough money and factor in contingency. Worst thing you can do is run out of money before completion as then you really are $&%^%!!