How Do I Get Loan to Build Flats?

Loan to build Granny Flats

Ask yourself these questions before you consider applying for a loan:• Is the price reasonable? • Will I be able to finance it?• Is it a profitable enterprise? • Lending institutions look at rent income, taxes and mortgages

to calculate an accurate value of the property for financing. In the eyes of commercial lenders, your personal financial state is not as important as the building’s ability to pay for itself. Do I have a good credit rating?

• Do I own property that I can use as collateral?• Should I consider taking out a loan as a corporation

or Limited Liability Corporation (LLC)? • Will I be able to manage the apartment building by

myself, or will I have to pay a property management company to handle tenant problems or maintenance issues that may arise?

• Should I consider a partnership? Is the building in good condition? Will I be able to increase the value of the building?

Gather information about the building you would like to buy for Loan

• You may not be able to get a loan if the building will require excessive maintenance, or if the complex has not had 85% occupancy for the three months immediately preceding your loan application.

Make a budget For Bank Loan

• The bank will want to know how much you estimate the project will cost. You will also need to be able to ensure you can afford somewhere to live in the meantime.

• According to Build store, the amount you can borrow to purchase the land will be 75 per cent of its current value, and for the build costs, again you can borrow around 75 per cent of the end value.

• If you already own the land or the property, you can borrow against the value of this, meaning you can borrow more of the build costs.

• You may need to access savings to fund the build so you should make sure they are not locked up. Also, if you area selling your house you will have to check your mortgage is free of early repayment charges.

Building Payments, the drawn down • An initial 10% deposit based on the total contract price, on

signing the building contract will be required.  Once construction then begins, it will progress on a drawn down payment system.

• Through the progress of the job, payments for each stage will be requested through to final completion.  The lender will have a loan assessor / registered valuer confirm each stage before signing the next progress payment approval.  Once construction is complete and the Certifier issues the Form 21 Completion Certificate, final payment will then be made.  It’s at this stage that your Construction Loan then coverts to a standard loan product whether it’s setup up as a redraw facility or interest only loan

Turn Key product

• This is what we like to do best.  We understand that for most home owners or investors, time is so precious.  Who wants to be buying clothes lines, putting in dividing fence lines or worrying about carpet and curtains?  Let us do this for you – it’s what we do, let us finish it off …

• We hope the above has been a guide that helps you understand how to secure construction loan

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