First Land Purchase

After a very underwhelming experience, my fiance and I have just purchased our first lot of land for a small & humble start in life.
Not much was explained during the proceedings of our appointment even though I was armed with a pocket full of questions.

As someone with very little knowledge of the process of payment and loans surrounding this decision in our lives I was hoping for more guidance on the day,
Maybe the community here @ homeone can help us.

What has been made clear is we have to pay our 10% deposit over the next few days, that can be done very simply.
As we have purchased land in the new release at Calderwood, the settlement won't happen for at least 12 months, worst case 24 months.

Is this when payment for the land also is required, the remaining 90%??

We then have the following 12 months to have a house plan settled and commence building, as far as I am aware.

What is the general arrangement in terms of loans?
Our issue will be in terms of deposit needed and both relatively low incomes.

Do we proceed to arrange one big loan or do we seperate on land and the house?

Thank you

Hi Daniel, congrats on the purchase of your land! Yes, you will need to pay your 10% deposit shortly. The remainder won't need to be paid until your land settles, which as you pointed out is likely to be 12-24 months away.

Is your land contract subject to finance approval?

We had to sign our land contract without this clause which was a little scary. So we just paid our deposit like you did, and once we got close to settlement we applied for finance. Luckily it all went smoothly! Once we had bank approval we provided this info to our conveyancer who handled settlement.

We also have 12 months after land settlement within which to commence building, and have to complete our home within 24 months after settlement.

Once you find a builder and sign a building contract, then you can apply for a construction loan. At that time your broker may apply to have the land & construction loan rolled into one loan.


Our 37sq Custom Hamptons Inspired Home:
http://forum.homeone.com.au/viewtopic.php?t=86931

Hi Dani, Thanks for the information


As far as I'm aware it isn't subject to finance approval & I would imagine they would have made mention of this while we were in the sales office, or at least I hope so.
Deposit is getting paid today to start things off,
Potentially sitting down with a broker today as well and then its an appointment with the solicitor to settle that part tomorrow.

In the time frame we so similarly share, when would be an opportune time to sign a building contract if we have already picked a design?

No worries.

Yes, seems more developer are insisting on removal if this clause to cover themselves. No much you can do.

Up to you really when you want to sign a building contract. Depends how soon you find a builder/ design you are happy with. Though if you sign prior to settlement and the sub division being completed, your site costs will be estimates only. They won't be able to confirm site costs for you until you get a soil test done.


Our 37sq Custom Hamptons Inspired Home:
http://forum.homeone.com.au/viewtopic.php?t=86931

Just a tip for anyone purchasing land. Always negotiate the deposit amount! 9 times out of 10 the developer will be accomodating as they want a need a sale. Instead of leaving a 10% deposit I negotiated to leave a 2.5% deposit, which was accepted. Best to keep as much money as you can in your pocket making interest rather than handing it over for what could be up to 2 years. Everything is negotiable when it comes to property Purchases.

We also bought land and this is our process so far.

- Got interested in a new development and went to the bank to see how much they would lend me. Got pre-approval for a certain amount. This only lasts 3 months and land was to settle in 18 months but i needed to do it as part of the contract and legal told me too.
- Had my legal negotiated a 5% deposit. Signed the contract and paid the deposit.
- Paid stamp duty minus 5K (The gov grant if you build within a certain time of owning land)
- My land will settle in a few months and I will need to go through all the bank's approval process again.
- My legal will let me know when settlement is about to occur (i think default is 2 weeks notice.. but you could ask for a longer period back during initial contract negotiations). Some people in my estate asked for 3 to 4 weeks.
- When legal tells me I let the bank know... go through all the paperwork and the bank will prepare me a cheque for the remaining 95%. Give that to legal who will settle.
- Mow my little bit of Australia until i find money to build

hi when did you purchase the land? and where? I only have 5% deposit

Purchased in mid 2015 - northern suburbs of Melbourne.

Yes, not all land developers are forthcoming with information. Sounds like you've got one like mine.

The contract should have specified when the balance is due, and that will most likely be within a set period after title of land (14 days). If you're going to build on the lot, then you'll most likely get a building loan and that will have to be with one lender as you'll not be able to split that into separate lenders.

I know low income, but see if you can aim for a 20% deposit for the total of the loan (land & house), this will help to avoid the outrageous loan insurance the banks will force on you if you're below that (I remember when it was 10%).

As the land and house progresses, you'll be liable for the balance of the load amount repayments. So the full land loan, interest (I think that can be interest only) and then at each stage of build there will be the payment to the builder and you'll have loan repayments for the current loan amount. Then at the end they'll combine the loan into one big loan and you'll begin the normal loan repayments.

For such a large investment, it's hard to get some of the basic common knowledge shared via the people selling you the product.