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New to this forum and new to buying a house, so therefore any help would be appreciated. We came this weekend across a nice land and home package which would suit our needs perfect.
But now comes the problem, the land will be titled earliest March 2013, real estate agent said most likely even July 2013. Not a problem at all so far. But is there anybody here who knows how finance for these kind of projects are arranged. Pre approval is only valid for 3 months. Know this can be extended, but we need to cover a full year.
So what do people do? Pay the 5% deposit for the land and a $1000 towards the house in the hope that finance can be arranged in a year. Or how do you tackle this?
I think all the banks are a little different, but you would need to talk to them and see what they say! They may be happy if you have signed contracts for house and land to issue formal approval and wait.
If you did place deposits I would check and double check that the contracts are subject to finance, we added a subject to finance clause for 100% of the land and construction!
It might be worthwhile talking to a broker, they deal with banks constantly and may have an idea which banks can or can't help etc
Can you get the land on its own by chance? We bought the land separately, 10% deposit only on the block of land. Nothing more to pay until it's titled. Might get the additional benefit of the land values going up also. eg. buy for $180k by March 2013 if it's worth $200k or $220k the bank sees it as you're now worth $20 or $40k. We did this and my sister in law as a first home buyer made on paper about $40k so no need for mortgage insurance, plus got the first home buyers grant.
Not sure why you would go packages, didn't really find any volume builders giving anything away it will just be bundled in somewhere. If available look at the block you want, search around for all home types that will suit and spend the savings on upgrades.
Our bank just did two loans from memory, one for the land only for when it was titled and we had to pay. Then progress payments when the house was being constructed.
The build times will vary also depending on the area and how much the builders have on but I would factor in 3 extra months for a single and 3-5 months for a double, the sales office will tell you one thing but I haven't met too many people that haven't had a delay.
Thanks for your responses. It was indeed an off the plan house and land package. We didn't wanted to put 10% for home and land down in a time where everything is so unsure.
We decided that buying a block of land is for us the best solution.
Just be aware once you buy the land and want to build on it later, when applying for the construction loan the lender will take the value of the land at that point in time for a valuation. That would normally be okay, but in todays market it might be an issue if prices fell.
Just to give an update about our situation, we decided nog to go ahead with the home & land package!
A couple of weeks later (Sept 2012) we came across a nice block of land for which we put down our 10% deposit. The land has not titled, in fact they have not even started with the ground works. Titles are expected (dream on) in Feb.... We hope that the land is released at latest in Aug this year.
In regards to builders etc, we have looked at a lot of designs and have received quotes from some builders so we have a clear picture in mind of what we want but we have not and will not sign up before land is released. A reason for that is that we don't have enough savings at the moment for a house. By signing a contract at this stage we would be forced to build a house without any extras simply because we can not afford these at this stage. Base price house is $198K and with upgrades, customised plans, rain water tank and grey water system, double glazing, extra insulation, kitchen upgrades, we are already hitting the $265K this is without any extra’s for fencing, upgrades in tiles, floor covering etc, we expect to pay $300K for a house we like.
Hopefully we do have enough savings, 10% of the house (30K) with all the upgrades plus an extra 2 or 3% for unexpected costs when the land titles (expect to have enough savings in July). If not, than we will pay mortgage over the land and safe as much as possible until we have enough, but we need to start building within 12 months after titles are released. At this stage we don’t want to be locked into financial contracts until we know 99% sure we are comfortable in repaying them.
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