“If the valuation comes in below your feasibility, where does the difference come from?”
It's easier to answer before the contract than after it.
Property finance changes when the site has a bigger plan.
A site with development potential isn't assessed like a home. Lenders look at the project (the approvals, the costs, your contribution and how it ends) as well as at you. Approval is never certain, so I compare lender policy before you commit to a contract.
On my booking page, choose “Initial 15 mins phone call”.
Mortgage broker since 2015 · Brisbane-based, working with clients Australia-wide
What I look at before you commit to the site
The site and the contract.
What you are buying, when it settles and what conditions sit on the contract.
Valuation treatment.
How each lender is likely to value the site: as it stands today, or with weight given to the planned outcome.
Development potential and subdivision.
What approvals exist or are still needed, and whether the plan is to subdivide, build or hold.
Construction funding.
How funds would be released in stages, and whether interest-only repayments apply during the build.
Pre-sales and GRV, where relevant.
How they are evidenced, and how each lender treats them.
Entity, equity and contingency.
Who borrows and who guarantees, what you are contributing, and what buffer sits in the budget.
The exit.
Whether you plan to sell, refinance or hold, and when.
Credit assistance is not tax, legal or financial product advice. Where your question turns on tax treatment, ownership structure or superannuation law, I work alongside your accountant, solicitor or licensed adviser.
Policy note
Where the plan and the lender's view can part ways
The site is worth more in the plan than on the title
- The situation
- The site suits a bigger plan than what stands on it today.
- Why lenders treat it differently
- Depending on the lender, the valuation may reflect the site as it stands, or give weight to the planned development where approvals and evidence support it. The valuation sets the LVR.
- What I do about it
- I ask how each lender would approach your site before you commit, so the equity you need is not a surprise.
Buy the site now, fund construction later
- The situation
- The land settles first, and construction funding follows.
- Why lenders treat it differently
- The purchase and the build can be assessed separately, and a lender's construction requirements, such as cost evidence and staged payments, sit on top of the purchase assessment.
- What I do about it
- I map the stages and the finance that covers each, and check how a lender's construction terms fit with the purchase.
Pre-sales or GRV carry the numbers
- The situation
- The project relies on pre-sales, or on a gross realisable value (GRV, the expected sale value of the finished project), to support the budget.
- Why lenders treat it differently
- Lenders differ on how they treat and evidence both, so the same project can look stronger at one lender than another.
- What I do about it
- I check how each lender treats them, and what proof it wants, before your feasibility is finalised.
A company or trust buys the site
- The situation
- An entity is the borrower, often with personal guarantees behind it.
- Why lenders treat it differently
- The entity determines whose income and assets a lender assesses, and lender policy on trusts and guarantors varies.
- What I do about it
- I map who is borrowing and guaranteeing early. The legal and tax structure goes to your solicitor and accountant.
Costs move during the build
- The situation
- The build costs more, or runs longer, than planned.
- Why lenders treat it differently
- Lenders look for contingency in the numbers, and rate options during construction depend on the lender and product. Some lenders do offer fixed rates.
- What I do about it
- I test the contingency you have allowed against what a lender will want to see, and confirm what rate options the lender offers during construction.
Credit assistance is not tax, legal or financial product advice. Where your question turns on tax treatment, ownership structure or superannuation law, I work alongside your accountant, solicitor or licensed adviser.
How the valuation shapes the equity you bring
The same site, two valuation approaches
Two outlines of the same lot. On the left the site is valued as it stands, giving a higher LVR and more equity to bring. On the right it is valued with weight on the approved plan, giving a lower LVR and less equity to bring.
The loan you asked for is the same in both. Which approach a lender takes is its decision, not mine.
Lender policy
Lenders don't all value a site the same way. Depending on the lender, the valuation may reflect the site as it stands, or give weight to the planned development where approvals and evidence support it.
What that means for you
The loan-to-value ratio is worked out on the lower of your contract price and the lender's valuation. A different valuation approach changes the equity you need to bring before construction funding is even discussed.
A general example
Same borrower. Same property. Different lender policy can produce very different outcomes. Two lenders look at the same site with the same approvals. One values it as it stands; the other gives weight to the approved plan. The loan you asked for is the same, but the LVR is not, and neither is the equity you need to bring. Which view a lender takes is its decision, not mine.
Worked example: an illustrative scenario, not a client result.
Christine’s view
“A site with potential is not the same as a site a lender will value for its potential. I would rather you learned that before you signed the contract than after.”Christine Junidar
Worked example: an illustrative scenario, not a client result.
Testing the finance pathway before committing to a project
A clear project story helps identify what needs to be proven. It does not remove construction risk, cost overruns, valuation risk or the need for specialist project advice.
Read Christine's view →What is LVR and why does it matter?
Read Christine's view →Repayments
It estimates repayments from the amount, rate and term you enter. A lender's assessment of a project is a different exercise.
An estimate only, based on the figures you entered and the assumptions listed beside the result. It is not a borrowing limit, a quote, or an offer of credit. A lender will assess your application against its own criteria.
Where to begin
Talk to me before you sign the contract.
Bring the address, the contract terms, the plan and how you intend to fund it. I'll tell you what a lender will want to see and where the gaps are.
I read every enquiry myself and will be in touch to arrange a time to talk.
General information only. It does not take your objectives, financial situation or needs into account. Lending is subject to lender assessment and criteria. This is not a quote or an offer of credit.
Credit assistance is not tax, legal or financial product advice. Where your question turns on tax treatment, ownership structure or superannuation law, I work alongside your accountant, solicitor or licensed adviser.