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sketchyt · 05-06-2014, 10:21 AM

I looked into this. Here's what my mortgage guy said in terms of securing financing (we never went through a formal process as I wound up selling so he's speaking in generalities):

"Your new mortgage will be a maximum of 80% of the “as complete” value. So if your land is worth $300,000, and the build cost is $900,000, the as complete value is $1,200,000. You can borrow up to 80% of that, which would be $960,000.

You need $900,000 to build the place, and your maximum financing is going to be $960,000 MINUS any outstanding debt you have on the property now. "

So, the variable in the above that affects things most is the land value (and build cost). I assume a 50 foot lot in your area is worth much more than 300k.

I assume there are many other ways to secure financing but that's what I got. Also, my 2 cents... if you have a 50ft lot, building 2 detached homes is more desirable. But it also depends on your hood. It also doesn't cost THAT much more than a duplex. PM me if you want more details on what I found out.

05-06-2014, 10:21 AM	#39
sketchyt Powerplay Quarterback Join Date: Sep 2005 Exp:	I looked into this. Here's what my mortgage guy said in terms of securing financing (we never went through a formal process as I wound up selling so he's speaking in generalities): "Your new mortgage will be a maximum of 80% of the “as complete” value. So if your land is worth $300,000, and the build cost is $900,000, the as complete value is $1,200,000. You can borrow up to 80% of that, which would be $960,000. You need $900,000 to build the place, and your maximum financing is going to be $960,000 MINUS any outstanding debt you have on the property now. " So, the variable in the above that affects things most is the land value (and build cost). I assume a 50 foot lot in your area is worth much more than 300k. I assume there are many other ways to secure financing but that's what I got. Also, my 2 cents... if you have a 50ft lot, building 2 detached homes is more desirable. But it also depends on your hood. It also doesn't cost THAT much more than a duplex. PM me if you want more details on what I found out.