Browse Forums Home Finance 1 Jan 04, 2013 9:48 am Hi people - ive been a recent lurker on this forum and have found some very useful information to date - my many thanks to the active contributors. Im currently working on a double fronted victorian era property in Williamstown VIC - ive finished renovating the historic part of the house ( 4 primary rooms plus hallway ) and am now up to the doing something with the horrible 1970's extension at the back. My plan is to knock the extension down completely and then rebuild it - but im a little confused about how to go about arranging the finances.... I have a mortgage on the property already and i want to extend this to cover the cost of demolition and reconstruction of the extension - so i will need to get the property revalued - im unsure about how the bank will value the property - my partner thinks we need to dress up the existing extension first - then get it valued, with the bank valuation based purely on what they see now... but i see this as a waste of money and time - surely the bank would value on the existing renovated heritage component plus the perceived value once the new extension is completed ? they know we plan on knocking down the old extension - so surely they wont value on what they can see - but on what the plans for the new extension will be worth.... appreciate any experienced insight on this one.... we've been arguing about it quite a bit.... and i think im loosing.... mainly because she yells louder.... Re: construction loan for renovations - the initial valuatio 2Jan 04, 2013 2:09 pm For our renovation we had to provide all building drawings plus finishings for the house to the bank. They then sent out a valuer to the property to get an idea of what would be happening and to look at the suburb. Your right if you are planning to knock down the back extension they aren't going to care if you dress it up. Ultimately they will want a set of construction drawings outlining what the house will be like once it has finished. They will also want a full understanding on how you are planning to finish the house. For example will the kitchen have stone benchtops, will the bathrooms have tiling to the ceiling etc. , hebel, brick, double brick, a/c, double glazing. For us the bank valued the completed new house they then told us what we could borrow on top of the original mortgage. Eg current house value $500, current mortgage $250, renovation budget $300, future house value $600, from that the bank told us we could have a total mortgage of $480 (80% of $600) which meant we would only be able to borrow an additional $230 ($480 - $250) and therefore have to put in the $70 ($300 - $230) ourselves. I hope that makes sense. Re: construction loan for renovations - the initial valuatio 3Jan 04, 2013 2:17 pm wembas, You said you do have a mortgage on the property already, but do you have equity in it? If so an option if the renovation cost is low enough might be to top up the existing loan as a "cash out" component. If not then a construction loan where the valuation is on end value can be considered. No need to dress it up. Cheers Tom Re: construction loan for renovations - the initial valuatio 4Jan 04, 2013 2:55 pm Thanks for your responses - I knew i was right !!!! so the last 3 days of my holidays that i spent sanding and painting WAS a waste of time !!!! grrr..... we do have about 100K equity in the property - but initial quotes from a few builders looks like we will be up for around the 300K range for the extension... I will need to sit down with some lenders and work through the nitty gritty in relation to extending the existing loan, new construction loan etc.... thanks for the feedback.... i will post up some photos soon of the work we've done so far... and what is left to do.... Re: construction loan for renovations - the initial valuatio 5Jan 04, 2013 3:05 pm Definitely construction loan then. Just need to be aware that because the extension will cost about 300K doesn't mean that it will add $300K to the valuation, the value of the existing extension will be taken into account for calculations. Cheers Tom 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 18896 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35191 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 11893 |