Browse Forums Home Finance 1 Sep 26, 2011 10:16 am Hi everyone, Fourteen years ago I swore I would never build again and yet here I am again thinking about it. We have just purchased a block in Beveridge at the Mandalay Estate. We currently have an investment property worth $300K owing $180K, live in our current home work $500K owing $240K and just purchased land $230K owing $210K but doesn't title till March 2012. What we want to do is build our new home on the block, move in and then sell our current home but keep the investment. I have no idea how to go about borrowing the money. I have been given advise by a broker telling me to loan out another $200K for the land therefore I will have 3 loans going but then my dilemma is how am I supposed to borrow to build my new home? We are looking between $320-$360 for the new house. I have also been told to just take out the $200K from my current home loan to pay for the loan and then get a construction loan to build the new house. I am so confused and at my wits end that I don't know what to do. I know what I want but I don't know how to go about it. Anyone out there who can advise me PLEASE ?? Re: What loan do I choose? How do I build before I sell my h 2Sep 26, 2011 9:22 pm Ok am putting kids to bed but quickly: To buy land and build your lender will normally do up to 80% of all properties less existing debts. So IPL $300 OOP $500 Land $230 = $1030k 80% x $1030k = $824k Less existing IPL $180 OOP$240 Available for land purchase and any costs $404k. When you get your home building tender then they can add that into the mix and lend another 80% of that value as well. REMEMBERING THAT THIS IS ALL DEPENDANT ON THE BANK VALUATIONS AS WELL AS YOUR INCOME SERVICEABILITY. When your new house is finished then you can sell your existing home - you will just have to ensure that the combined debts of your investment and new build are less then 80% of their values. Clear as mud? Some things are worth waiting for. Re: What loan do I choose? How do I build before I sell my h 3Sep 27, 2011 12:00 pm Wow... ok thanks so much for that. I was thinking maybe put my current home on the market 2 months before handover of the new house. Do you think thats a good idea? Or should I wait until I move in? We currently bring home $1750 pw but I am worried that we will not be able to service all loans until it sells. The loan for the new home, do I pay that in progress payments and then pay the full morgage after handover or do I pay the full amount of the loan from the start. Sorry I am little uneducated when it comes to finances Re: What loan do I choose? How do I build before I sell my h 4Sep 27, 2011 2:59 pm Your construction loan should be interest only and progressively drawn down in stages until the final payment then it reverts to P&I. It is a hard decision when you should put your existing home on the market. Some areas sell really quickly, some tend to drag - best to check with a couple of local real estate agents. Don't forget you will also have the option of renting your existing home out once you move into your new place which would assist with the loan repayments. Some things are worth waiting for. Re: What loan do I choose? How do I build before I sell my h 5Sep 28, 2011 2:49 pm I actually thought of keeping it and renting it out but if I borrow the money for the land on my current morgage it will take it up to $450K, then when I borrow again for the construction process do I borrow on top of it again? The rent in the area will only be enough to cover a $230K morgage, I would have to service the balance and also pay the extra on the new loan... does that make sense? The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 13506 Use a product like Equisol's Vitalise to clean the deck then coat with a penetrating timber oil. It will look 10 years younger and add value to your home. Visit for… 1 11241 Building a fence now will help limit people dumping rubbish and soil on your property. Many houses in suburbia on small lots have fences up before a build. I moved into a… 1 3568 |