any loans managers out there? Need advice

[soph'smum]

Hi there

Well, we've decided we are going to move the family back to the middle of nowhere - a bit of a tree/lifestyle change.

We're thinking about building a house, but have a couple of questions re: borrowing to build in a rural community.

We're going to need to borrow about $130,000 to build the house (big 4brm), servicing the loan is absolutely no problem, but wondering whether a bank will actually lend you money to build a home (total cost of build is $210,000) when the average priced home is about $80,000 - $100,000 in the town (for an old home).

Will a bank simply just want to know they can get $130,000 for the house if they ever had to forclose????? Or would it be too much of a risk????

Our other option is to buy a house for about $80,000 and then spend about $50,000 renovating it???

Any advice appreciated.

cheers...Michelle

[andie_pandie]

Hi Soph'smum

Could you let me know the Postcode of the area that you are thinking of so I can have a look for you. From your post I am assuming that you have a deposit or own the land to approx $80K, and the total value of the property will be $210K once built? Could you clarify the above for me so I can check it out.

[soph'smum]

Hi Andie_pandie

Yes, we have a $80000 deposit and have land aside from that (which is probably only valued at about $10,000).

The postcode is 3396, Victoria - the town is called Hopetoun.

Does this help??

cheers...Michelle

[soph'smum]

Sorry, should further clarify that the $210,000 is the actual build price - so our deposit would come off that.

cheers...Michelle

[andie_pandie]

Hi Michelle, leave it with me I will investigate for you if it will be over capitalised for the area and if ok which lender may be able to assist.

I'm in Brisbane, could you PM some contact details and I will try to get back to you tomorrow. One question that will come up is jobs, are you re setting your up down there???