My section is nearly 1/4 acre at the back so plenty of room for a small house which my daughter would like to have built. My question is would she be able to secure a mortgage (she has a deposit) if its not subdivided or would we have to subdivide? Does she have to actually own the land or could she get a mortgage for the house only?

alyce23 - 2021-03-04 10:49:00

alyce23 wrote:

My section is nearly 1/4 acre at the back so plenty of room for a small house which my daughter would like to have built. My question is would she be able to secure a mortgage (she has a deposit) if its not subdivided or would we have to subdivide? Does she have to actually own the land or could she get a mortgage for the house only?

Lots of unpack here. She cannot get a mortgage but you can depending on your financial position. If you subdivided she may get a mortgage but again it would depend on her financial situation.

There are probably other solutions so go and see your solicitor in the first instance.

johnston - 2021-03-04 11:15:00

If the house is built on your land.. e.g. your daughter just pays for the house to be built.. if a few years down the track the bank / mortgage holder has to foreclose, what do they have to sell to get their money back.. a 3 year old house, but not the land it is sitting on.. not a very saleable item !!

Will the city council let you build a second dwelling on the land... can the land be sub-divided ??

onl_148 - 2021-03-04 11:25:00

You may be able to build a minor dwelling under 65 square meters on the same title and a mortgage over the existing property. You can in Auckland but rules may be different where you are.

Edited by gamefisher at 12:31 pm, Thu 4 Mar

gamefisher - 2021-03-04 12:23:00

Do you can get the mortgage and build the house with your daughter covering the mortgage.you can use you equity as leaverage.i have a small mortgage on Another house that I own, my daughter's live in it and pay all the bills, this is in a trust. Working well.

msigg - 2021-03-04 12:35:00

We did this with a property.

1) Talk to a good surveyor, preferably one that has planning experience, and is capable/willing to deal with Council on issues, and an sort out the route for power/water/sewage/access that will comply with subdivision requirements.
2) We put it on as a secondary dwelling, and let the dust settle, be aware of neighbour issues.
3) When the dust had settled, the surveyor/planning person filed and application to subdivide the unit off from the main section. This is why it important to have the expertise from a professional, they know setbacks, lighting, turnaround rules etc.
4) We got it subdivided.
5) Then we ended up with a 3 bed on 1 title and a 2 bed unit on a separate title. NO IT WAS NOT CROSS LEASED.

kenw1 - 2021-03-04 12:50:00

Your daughter can only get a mortgage on her own land so either sub divide and 'sell' to her or you arrange the loan in your name (and responsibility) and she pays. Can't use Kiwisaver though for the second option though. Hope that helps

jeffqv - 2021-03-04 15:47:00

If the lady pays for the new house and her daughter lives in it and pays the mortgage, is the daughter a tenant?

lyng1 - 2021-03-06 18:53:00

be careful because IRD could view the daughter as a rent paying tenant, even if she does not pay any rent! They will asses a notional income of current rental value and tax you on that.
You first tep however is to go to council and ask if you can build/subdivide.

stylus1 - 2021-03-06 20:13:00

also the council will charge more on ya rates unless you prove that additional dwelling is for family only ..

pettal - 2021-03-07 08:56:00

also if consented and operating as a separate dwelling, will also attract second set of fire service and EQC levy payments on your insurance.

sparkychap - 2021-03-07 09:16:00

pettal wrote:

also the council will charge more on ya rates unless you prove that additional dwelling is for family only ..

they charge twice now regardless, if you have two kitchens, in Hamilton it adds $1k to our rates.

gabbysnana - 2021-03-07 09:31:00

sparkychap wrote:

also if consented and operating as a separate dwelling, will also attract second set of fire service and EQC levy payments on your insurance.

and power and gas line charges.

gabbysnana - 2021-03-07 09:32:00

stylus1 wrote:

be careful because IRD could view the daughter as a rent paying tenant, even if she does not pay any rent! They will asses a notional income of current rental value and tax you on that.
You first tep however is to go to council and ask if you can build/subdivide.

the cost to subdivide is pretty horrendous, that has to be factored in, plus the time it takes.

gabbysnana - 2021-03-07 09:33:00

lyng1 wrote:

If the lady pays for the new house and her daughter lives in it and pays the mortgage, is the daughter a tenant?

She could gift the daughter the money and it becomes the daughter building the new house so she wouldn't be a tenant.

bryalea - 2021-03-07 09:43:00

Mate just got snapped with the same situation.
He was told by everybody designing & building the extra house that he could subdivide afterwards if he wanted too.
Turns out NOPE.
Lots more red tape/cash & complications with land area required by the local council.

mrfxit - 2021-03-07 21:00:00