Mortgage broker North Perth

The cottages, and what a lender sees in them

The typical North Perth house is small by modern standards, built in brick or weatherboard, and sitting on a lot of a few hundred square metres. Almost all the value is in the land.

That has two consequences. A tired house is not the problem buyers expect it to be, and a beautifully renovated one does not always add what the owner spent.

Valuers reflect that by weighting land and location heavily. It is why two similar cottages a few streets apart can produce quite different figures.

• Land size and the zoning, which set what the block could become
• Whether the property sits in a character area limiting demolition
• Condition items a valuer will note, such as restumping or wiring
• Approvals for any past extension, which are often missing on old cottages
• Recent sales in the immediate streets, not the wider suburb

Subdividing the rear, funded step by step

The classic North Perth move is to create a lot at the back of an existing property and build on it. It works because the land is valuable and the zoning in parts of the suburb supports it.

The finance runs in a sequence rather than as a single approval. Each step depends on the one before it, and skipping ahead is where people get stuck.

1. 1

   Confirm the block can be subdivided

   Zoning, lot dimensions, access and the position of the existing house all decide it. Get a planning answer, not an opinion from a neighbour.

2. 2

   Release equity to fund the subdivision costs

   Survey, approval fees, service headworks and contributions come before any title exists. That money comes from equity or savings.

3. 3

   Get the new title issued

   Until titles issue, several lenders will not value the rear lot at all. The ones that will are a small part of the panel.

4. 4

   Fund the build as a construction loan

   Once there is a title and a fixed-price contract, the build draws down in stages like any other construction facility.

Holding costs are the item most often forgotten. You are carrying the existing loan through a process that produces no income until the new dwelling is finished and let or sold.

Renovating, refinancing and first purchases

Not everyone here is developing. A steady share of our North Perth files are young professionals buying their first place close to the city, and owners refinancing after a renovation.

The refinance cases need the renovation recognised in the valuation. An automated valuation reads sales data and knows nothing about your new kitchen, roof or rear extension.

Where the finished work needs to count, we place the file with a lender who sends a valuer through the property. It could save you money, though whether it does depends on your current rate and the costs of moving.

• Home loans for first buyers competing for inner-city cottages
• Refinancing and equity release once a renovation is finished
• Construction finance for rear dwellings and second storeys
• Development finance where a lot supports several grouped dwellings
• Investment lending on the rental stock close to the city