Will the banks look at us

About to delve into the world of subdividing...we hope.

DH $46k

Me $15K

Kids 9,5,9mths

PPOR owe $50k value $320k $46k redraw LOC IO loan CBA

IP owe $195K value $230K

Plan to subdivide rear of ip into 2 blocks suitable for 2 & 3 br units

Don't expect subdivision to cost anymore than $46k in redraw

So..

PPOR then owe $96k

IP owe $195k rental $230 pw

and 2 blocks worth $70k each ??

We refinanced 12 mths ago due to Wizard being bought by Aussie who then handballed us to GE...so we took out a Wealth Package with CBA and I guess we have cross colatrerised (sp?)

The expected rental on the 2 units....$240 & $250 pw

Any advice / opinions?

Are we dreaming...

Liz :)
 
?? Cheap

Is it? All very new to me. Planner/surveyor has just rang and said I can come in and grab the concept drawings later in the week..he hasn't been out to the block yet to measure, but did walk around the block with me a couple of years ago. I should expect he will be asking for a deposit for his works.

What type of $$ should I more likely expect Rugrat, to subdivide?
 
I was quoted about half that to do a single subdivision up to the point of plans, and then the option to use their people to build etc......with it being two smaller blocks/units, 46k should cover it.

There was a thread here where the bank holding the existing mortgage took over the titles of the subdivision preventing the people from using another finance company, but if you have that covered, it should be fine. Will you be selling as blocks, off the plans or after building???
 
Yes you have indeed cross collateralised those securities and this is where you could come unstuck.

Firstly dont use the redraw on your PPOR as the interest will not be Tax deductible.

Cancel the redraw and get the Bank to set up a separate loc or investment loan to cover the cost of the subdivision. CBA wont want to do it this way and will not understand why you want it but ignore them.

Now dont forget you will need to get their consent to subdivide and 3 lots on the same title initially might not be there cup of tea depending which side of the bed CBA Credit got out of.

If you intend to construct on the blocks (and i assume the DA allows for separate Title prior to completion of any new dwelling) you might have a funding issue with CBA.
 
Just got off the phone to CBA

I was told they couldn't help me due to DH and my income.

So I guess the only way to finance subdivision is to use LOC on PPOR

PPOR may one day become IP. Cannot rent where we live. Everything is snapped up straight away.

Have considered the idea of turning IP into 4 bdm. increase rent $20-30 pw and value $20-30K but that won't help with our serviceability as far as CBA is concerned

Try and get more hours...

Suggestions?

Liz
 
Thanks Wylie I have spoken to a mortgage broker on the forum, hoping for a solution.

I have been giving some more thought to it . What if.....
a kind relative 'loaned' funds to pay out PPOR (interest would be paid to this kind relative but the banks wouldn't know this ;) )

So I guess no cross collaterisation exists as only one loan now.
I could attach a chq book to the IP loan and when $$ are required to pay for subdividing costs could move money form high interest savings account to loan as required so as to keep all deductibles accounted for.

Or payout PPOR and use said MB to refinance this schmmozle into something more palateable

??
 
Thanks Wylie I have spoken to a mortgage broker on the forum, hoping for a solution.

I have been giving some more thought to it . What if.....
a kind relative 'loaned' funds to pay out PPOR (interest would be paid to this kind relative but the banks wouldn't know this ;) )

So I guess no cross collaterisation exists as only one loan now.
I could attach a chq book to the IP loan and when $$ are required to pay for subdividing costs could move money form high interest savings account to loan as required so as to keep all deductibles accounted for.

Or payout PPOR and use said MB to refinance this schmmozle into something more palateable

??

Mortgage fraud is not usually a good idea... ;)
 
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