Browse Forums Building A New House 1 Feb 01, 2009 4:29 pm Hello all, so I am in the stages of doing all the research and finding out what is going to suit us in terms of finance.
I would really like to build with Eden Brae but they do not have their own land. So there is a need to buy land and then contract a builder. What are the benefits or the negatives of the two contracts rather than the one home contract packages. We are currently renting and want to know how others have done it, doing it. Really help as much information as I can. We are First Home Buyers and I am so confused. Re: 2 Loan Contracts, 1 for land 1 for house. 2Feb 01, 2009 5:24 pm hey there, we bought our land privately and then contracted builders. The bank only provided one loan approval and one loan for the whole lot. The condition was that the building contracts were lodged and approved (ie. valued) prior to settlement of the land purchase.
You could look into this option. Get a good mortgage broker to assist you. cheers Annie A thankful person is a happy person. [/color]My hobby design blog: http://aviewondesign.blogspot.com/ Re: 2 Loan Contracts, 1 for land 1 for house. 4Feb 01, 2009 5:32 pm We are doing the same thing.
We cannot get finance approval on the land until the house contract is ready as well. It is a real pain trying to balance both and satisfy the land people. Re: 2 Loan Contracts, 1 for land 1 for house. 5Feb 01, 2009 7:09 pm Hi there,
My broker has organised a land loan and then a construction loan on top of it to the max we want to borrow, with full approval cominng through next week, hopefully! HTH Building Thread viewtopic.php?f=31&t=13002 Site start: 8th July 2009 Handover: 11/12/2009! 5 months total build time. 40 sqs of luxuary...Bliss! Re: 2 Loan Contracts, 1 for land 1 for house. 6Feb 01, 2009 8:01 pm we just asked mortgage choice to organise a loan to buy land and then build a house, so he just got us a cba loan to cover both, its not hard to wrap them both into one loan if bought seperately Blog - http://snakedr.blogspot.com/ Build Thread - viewtopic.php?f=31&t=12084&p=307406#p307406 Status - PCI 15/10. Things nearly done. Re: 2 Loan Contracts, 1 for land 1 for house. 7Feb 01, 2009 8:10 pm billdsl we just asked mortgage choice to organise a loan to buy land and then build a house, so he just got us a cba loan to cover both, its not hard to wrap them both into one loan if bought seperately Did you have to both contracts ready before they bank would loan you the money? Westpac will not give us money for the land until they have the signed building contract, which is pending access to the land to perform a soil test. We've requested a four week extension on the land contract finance clause. If the builder is unable to provide us with a contract in time for that, I will have to contact the developer and discuss how we go forward with things. They want to sell - I want to buy in the end things should work out. Re: 2 Loan Contracts, 1 for land 1 for house. 8Feb 01, 2009 8:12 pm gilese Hello all, so I am in the stages of doing all the research and finding out what is going to suit us in terms of finance. I would really like to build with Eden Brae but they do not have their own land. So there is a need to buy land and then contract a builder. What are the benefits or the negatives of the two contracts rather than the one home contract packages. We are currently renting and want to know how others have done it, doing it. Really help as much information as I can. We are First Home Buyers and I am so confused. Hi gilese, there is nothing to worry about. This is usually how it's done in Sydney (as two separate splits) and it makes no difference apart from two separate direct debits for repayments. If you get a pro pack loan, you can have a number of loan splits included in the one fee. You can fix the interest on the land loan and have the construction as variable. A few lenders will insist on merging the two loans upon completion of construction but that's not an issue either. Your lending manager (be it broker or bank staff) will look after the home loan approvals for you so you don't have to worry about the 2 separate approvals. 2 loan contracts 1 for land 1 for house 9Feb 01, 2009 8:16 pm I don't believe there are any disadvantages at all..its all plus plus plus. We did the same many years ago with our first home. Essentially it means you are buying the land direct from the source (developer) and therefore saving yourself an additional margin if the builder had bought it. ... and that could have been anywhere between another $15 to 250000 or even more in a bullish market.. the additional money covers his purchase of the land and his gamble to buy it. At the ime when we built there was no grant or consessions so by having 2 contracts we saved a large amount of money on the government stamp duty..only paying stamp duty on the smaller land value and not on the total if it had been one contract. My bank had no problem with the arrangement and just combined the 2 purchasors into one loan at the same time. Just flicking thru the builders web sites this type of sale arrangement seems more prevelant then ever before. .. it brings the home and land package closer together. Hope this helps Life is an enjoyment, enjoy it Re: 2 Loan Contracts, 1 for land 1 for house. 10Feb 01, 2009 8:55 pm gilese Hello all, so I am in the stages of doing all the research and finding out what is going to suit us in terms of finance. I would really like to build with Eden Brae but they do not have their own land. So there is a need to buy land and then contract a builder. What are the benefits or the negatives of the two contracts rather than the one home contract packages. We are currently renting and want to know how others have done it, doing it. Really help as much information as I can. We are First Home Buyers and I am so confused. Hi Gilese, We are also First Home buyers and we bought the land privately (not even state agent involved) and now we are in the process of siging the contract with the builders. The bank approved the Land loan and now our broker is about to get the pre-approval for the construction loan. Our bank doesn't charge you any extra for having 2 loans and you only pay one mortage fee a year (at least with our bank). Our broker figured it all out and recommended this bank as they are good with land and then construction loans. Thlo is right, our mortgage broker advised that having the 2 separate loans might be best if we decide to fix the interest loan in one and have it variable on the other (so you can make extra payments, make re-draws, etc). Talk to a good broker and they'll be able to advise what's best. I don't think that you should limit yourself in terms of builder or area just to get one loan only. Re: 2 Loan Contracts, 1 for land 1 for house. 11Feb 01, 2009 9:38 pm Thanks everyone.
Problem with eden Brae is they do not have their own land at Ropes Crossing, therefore the need to purchase the land with Delfin and the contract a builder. My main concern is having enough to pay rent and to pay for the loan. Is there any options out there to have the loans delayd until you move in? Sorry about all the questions as I need to try and get my head around all of this. We are considering buying land at Ropes Crossing and either contracting Eden Brae or Widom homes for the build. Ropes Crossing house and land, construction loan 12Feb 01, 2009 10:40 pm I don't think so. If they did allow you to do that, they would need to charge you a lot more as they would pay the interest for you.
Some developers are offering not to invoice progress payments (saving you interest on your construction loan) until project completion. Re: 2 Loan Contracts, 1 for land 1 for house. 13Feb 02, 2009 6:53 am No we didnt need to have either contracts signed before applying for the loan. Our land settled back on the 16th of Jan and I still havent signed the building contract.
Our broker went for pre-approval of the amount we needed to borrow plus a bit to spare in case of mis calculations Blog - http://snakedr.blogspot.com/ Build Thread - viewtopic.php?f=31&t=12084&p=307406#p307406 Status - PCI 15/10. Things nearly done. Re: 2 Loan Contracts, 1 for land 1 for house. 14Feb 02, 2009 8:48 pm We bought our land about 6 months before we finally decided on a house to put on it, so there wasn't any chance of having one loan
As soon as our construction loan is fully drawn out though (when progress payments etc finish) we're able to combine our land loan and construction loan into one loan so that we don't have to deal with two direct deposit payments (not that this is an issue though - it just means we don't have to worry about which loan to put extra repayments onto). Both loans have the same interest rate though. I'm not sure how it would go if the land loan and the construction loan were on different interest rates?? If you're concerned about paying the loan while paying rent, see if there's any chance you can pay Interest Only on the land loan until the construction is finished. This may make finances a bit more manageable?? Re: 2 Loan Contracts, 1 for land 1 for house. 15Feb 03, 2009 9:23 pm For me it is better to have two loans; land & construction loans. Also you should complete the settlement of your land before applying for a construction loan otherwise you might have problem with the valuation. Re: 2 Loan Contracts, 1 for land 1 for house. 16Feb 04, 2009 8:30 pm So if I have this right and proper home and land package one where the builder already owns the land or the owner of the land has already packaged a house on the land that is the only way you can have one loan.? Re: 2 Loan Contracts, 1 for land 1 for house. 17Feb 04, 2009 9:18 pm gilese So if I have this right and proper home and land package one where the builder already owns the land or the owner of the land has already packaged a house on the land that is the only way you can have one loan.? Initially you will have two loans (one for land and construction loan) but once the construction of the house finishes, the bank will merge the two loans. Re: 2 Loan Contracts, 1 for land 1 for house. 18Feb 04, 2009 9:30 pm gilese My main concern is having enough to pay rent and to pay for the loan. Is there any options out there to have the loans delayd until you move in? The construction loan is release by stages. For example, the builder might require you to pay x amount after pouring concrete. The bank will give you this x amount. You will then start paying interest for x amount. 3 months later builder finish laying out bricks and request you to pay y amount. The bank will release y amount. You will now be paying interest for x + y amount. This goes on until building completes. Hope my explanation makes sense. land and construction loan while paying rent 19Feb 04, 2009 10:38 pm gilese So if I have this right and proper home and land package one where the builder already owns the land or the owner of the land has already packaged a house on the land that is the only way you can have one loan.? Not really, there are lenders that will give you one loan even if it's not done in the way you describe. But I think you are paying too much attention to the number of loans, what is important is the total loan amount and when your repayments start (which I think is your main concern). The lender will approve a total loan amount for the whole project, advance you enough for the land first (if your developer requires you to settle land first) and release funds in stages (usually 5 stages) as the builder completes the agreed stages which increase your repayments incrementally. Mind you you'll only be paying interest during this time (not principal). Your earlier concern of paying rent while you are paying interest on the land portion as well as progress payments is unavoidable. The only way you avoid this is when you buy a completed home and paying the same interest (only built into the price!). The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19096 MBA and HIA both have sub contract agreements, check them out 2 7314 Industry type domestic contracts are prepared by industry bodies for the benefit of the builders. This means that if you are the owner watch out. One of the points is… 0 3225 |