Browse Forums Home Finance 1 Apr 02, 2012 9:51 pm Hi Guys, Wondering if any of you have been in this situation: We currently have a investment property that we rent out for $1500per month, we owe $430K on it. Purchased in Jan 2011 for $540K. Now we wish to demolish this rental and build a new place on it and again rent it out, with plans a few years down the track to live in it. Building a new place will cost about $300K. How is the loan calculated?, is it simply $430k + $300K? and what are the changes we will even get the loan? Our stats: We are currently living with my parents (don;t go there...) I take home $7000 a month after tax, my partner works casual $1000 a month after tax. We receive $1500 from our tennants. our outgoings are: morgage $2000 car loans $1000 Others $2500 We have $120K in savings and no credit cards or other debts. hope some of you brokers types can help... mainly worried that I won't be able to get a loan, i think it is called serviceability?.... Re: possible to get constrution loan? 2Apr 03, 2012 1:20 am Hi, Firstly welcome to the forum! would need a lot more data to give you an accurate answer,but ill provide a few pointers... 1. Yes your loan will be current + new build cost = $430 + 300k 2. Getting a loan approved is not simply making sure the numbers stack up ( serviceability) if it was it would make my life so much more easy ...there are many factors for a bank to consider - most falls into what we call the five c. Five c- Character of the client - clients history and saving pattern and employment pattern. Capacity - which is serviceability Capital - LVR Collateral - Security on offer, or future security in your case Condition- Employment type, credit file etc.. ---- Based on the vague data you have supplied; it's a bit hard to advise you on what your serviceability looks like or your chance of approval...however one thing i would say is your partners emplpyment income may not be accepted if she/he only been working for his current employer as a causal for less then 12-24 month, depending on the lender ( generally speaking) Also note, valuation for your project you want to carry out will most likely fall short...why? Say the building loan is fine at $300,000 The land with the existing building demolished will most likely DROP in value as an example from original $540....down to $48,000 ( land value only) so really your LVR for your LAND only is now sitting at 430/480 = 90% LVR.... Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: possible to get constrution loan? 3Apr 03, 2012 11:28 am many thanks michael, a LVR of 90% will mean i will need to take out morgagae insurance?... Would it be a good idea then to perhaps use some of our savings to pay off the current loan, thus lowering the LVR so we don;t have to pay morgage insurance? Re: possible to get constrution loan? 4Apr 03, 2012 2:36 pm Your best to use the cash to push down the LVR - ie cost of construction is $300,000 - apply for a 70% LVR on the build using your cash...so in total the land and build LVR combine is sub 80%. By you paying down the mortgage it would leave you stuck with that one bank only; you want options and flexabililty just in case. Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au In Qld it is a requirement that a builder must have a cost breakdown, for building a home to the same specification, with the same inclusions and the same finish. So ask… 1 4350 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 19108 You can wash over existing pavers with 10% solution of water and hydrochloric acid, then wash off. The acid will provide for required bond key with new concrete. 1 36961 |