First time post so hear me out!
My wife and I live in the Eastern suburbs of Melbourne and have a house worth approximately $3.8 - $4.0m based on other sales. With this comes a significant mortgage at $2.3m. Yes I know its a massive debt!!! Herein is the reason for this post as we wish to reduce our debt levels, maintain net wealth levels, and live in the same area. We don't need such a big place so its all good. Solution = Dual Occupancy. There is a possible catch and that is finance.
Financials
* Net cash $1.6m after selling house and paying down mortgage. We will have no other debts. Only other assets are Super $400k and Cars $120k. We are 42 and in secure jobs earning a combined $350k.
* Propose to buy a block of land suitable for Dual Occupancy - this will need to be close to $2.6m.
* Build costs - we need to go high end in this area so including all advertising, titles costs, build, and landscaping we are looking at $2.0m. It is very high but each will have all the luxuries.
* So.... if all the above transpires our max debt number would be $3.0m which will be for two townhouses side by side with a value for each of $2.3-$2.5m (on at least 400 square metres each)
Issue
Our max debt of $3.0m is at odds with what the bank previously would lend us on our single occupancy build which was $2.3m.
We do wish to sell one so that our mortgage is only around $600-$700k.
1. How can we make this work? Do we need to sell one off the plan?
2. Is there a special loan that we can get?
3. Do we say that its for investment so the rental yield on the second one is factored into the maximum debt number? i.e. they may add another $50k in income to the equation so that we can get over the line on lending?
4. Any other neat tricks apart from the obvious - i.e. keep build costs down, keep land buying costs down... etc
Thanks in advance
Roger