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Borrowing for development

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  • Borrowing for development

    I'm looking at a simple development/renovation and have bank lending approved for the initial purchase but have not queried yet about borrowing for development costs. Previously when looking at this type of borrowing the bank has requested fixed price contracts be reached with contractors which is possible, but in order to increase profitability I want to be able to manage the project + subcontractors + materials. Does it sound feasible to approach the lending in this way but not adhere to the fixed price contract? Any advice or direction appreciated.

  • #2
    Hi Craig, I was in a similar situation to you a few years ago, in that the bank only wanted to lend for a fully costed and managed development. With help from a mortgage broker, I was able to obtain bank funding to self mange two builds, saving quite a bit along the way. I had little building experience, but plenty of project management (in my day job).Not an easy sell and even after approved not without friction, but financially worthwhile. PM/call me, as I am happy to talk over how I worked within the bank's rules and yet made it work for me.


    • #3
      Hi, I have a similar issue. All my mortgages are with the same bank including own home. I am thinking doing a subdivide and a build. Is it better to separate the investments loan to another bank before I start. Current bank is not very responsive for most of the things.


      • #4
        Are you trying this in Oz or NZ?
        Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!


        • #5
          In New zealand.


          • #6
            Kris Pedersen has a downloadable re One Bank ie all your eggs in the same basket it’s worth a read.


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