FROM THE BLOG

Subdividing a property can be an attractive prospect for homeowners looking to maximize the use of their land or create additional income streams. However, if you have a mortgage on your property, it’s essential to understand how the mortgage might impact your ability to subdivide. In this blog post, we’ll explore the key considerations and steps involved in subdividing when you have an existing mortgage.

1. Review Your Mortgage Agreement

Before proceeding with any plans to subdivide, carefully review your mortgage agreement. Mortgages often include specific terms and conditions related to property alterations, including subdivision. These terms may outline the lender’s requirements and restrictions.

2. Seek Approval from Your Lender

In most cases, you’ll need to obtain approval from your lender before you can proceed with a subdivision. Lenders have a vested interest in the property they hold as collateral, and they want to ensure that any changes to the property will not jeopardize their security. Contact your lender and inform them of your intention to subdivide. They will guide you on their specific requirements and whether they will grant approval.

3. Assess Your Financial Situation

Subdividing can involve various costs, including surveying, legal fees, local government approvals, and potential infrastructure development. Ensure that you have a clear understanding of the financial implications and that you can manage any additional expenses associated with the subdivision.

4. Local Government Regulations

Each local government authority in Victoria, has its own regulations and zoning requirements regarding property subdivision. You’ll need to consult with your local council to understand their specific rules, zoning laws, and subdivision application process. Compliance with local regulations is crucial for obtaining necessary approvals.

5. Survey and Subdivision Plan

You’ll need to engage a licensed land surveyor to create a subdivision plan that complies with local government requirements and your lender’s conditions. The surveyor will assess the property, design the subdivision layout, and prepare all necessary documentation.

6. Subdivision Application

Once you have the surveyor’s plans and other required documentation, they will submit a subdivision application to your local council. The council will review the application, ensuring it meets zoning and planning regulations. It’s essential to follow their guidance and make any necessary adjustments to your plans based on their feedback.

7. Mortgagee Consent

Once council has certified the plan of subdivision and issued the statement of compliance, you will need to engage an experienced conveyancer who will prepare the necessary application to subdivide for your bank to review and make the certificate of title available for lodgement.

8. Settlement

Upon receiving the certificate of title from your bank, your conveyancer can proceed with lodging and finalising the subdivision. This typically involves the new titles issuing and being returned to your bank.

Conclusion

Subdividing a property with an existing mortgage is possible, but it requires careful planning, consultation with your lender, and compliance with local government regulations. Before embarking on a subdivision project, ensure you fully understand your mortgage agreement, seek lender approval, and navigate the process with the help of professionals, including surveyors, conveyancers, and local government authorities. By following the necessary steps and adhering to legal requirements, you can successfully subdivide your property while protecting your mortgage and financial interests.

Further information on buying or selling property can be obtained from the State Revenue Office website here: https://www.consumer.vic.gov.au/housing/buying-and-selling-property or by contacting ConveyancingX.