Browse Forums Building A New House 1 Feb 18, 2016 4:43 pm Hi all i'm hoping someone can explain something for me. We have put a deposit down on land which titles in Aug. When we do our finance application how do the banks work out what they will loan? It's not like an established home that they can see. Thank you Tracey Re: Finance Question 2Feb 18, 2016 6:07 pm They usually have a valuations person work it out. It will probably be based on location, sales in the area, materials and level of finishes, etc. Just ask them what they need for valuation. Building a Fairmont Custom in Seaford Meadows Our Build Thread Re: Finance Question 3Feb 18, 2016 7:50 pm They will probably want to see a tender for the home you plan to build on the land. Follow Our Build Here: viewtopic.php?f=31&t=75667 Building with Kurrajong Homes in Alumuna Walk Village. Re: Finance Question 4Feb 18, 2016 8:26 pm Lily123456 They will probably want to see a tender for the home you plan to build on the land. My broker will do all that won't he? I'm scared they won't lend what we need. Maybe I'm stressing over nothing. I don't know. Re: Finance Question 5Feb 18, 2016 10:00 pm Hey Tracey, we are in the same boat as you. From what I understand, a) the bank will need to value the land to decide how much to lend you. Usually this isn't until the land titles as they like to physically see the land/stage complete. Hopefully they value it similar to what it cost you, so you do not have a shortfall. If you have a shortfall, it will have to come out of your own pocket . This is the part that's a bit risky when buying untitled land, and b) to loan you money to build, they'll need to see a signed building contract and value the home based on it Re: Finance Question 6Feb 19, 2016 5:43 am Dani_J Hey Tracey, we are in the same boat as you. From what I understand, a) the bank will need to value the land to decide how much to lend you. Usually this isn't until the land titles as they like to physically see the land/stage complete. Hopefully they value it similar to what it cost you, so you do not have a shortfall. If you have a shortfall, it will have to come out of your own pocket . This is the part that's a bit risky when buying untitled land, and b) to loan you money to build, they'll need to see a signed building contract and value the home based on it Hey Dani_J where are you building? It makes it fairly hard to know what price you should be paying for land when they sell by release and untitled. We just simply brought where we could afford, as 10 minutes down the road the same block sizes were 50k+ dearer and just a standard block. Ours is park frontage so hopefully that's a bonus. Re: Finance Question 7Feb 19, 2016 8:39 am Yes, tell me about it! We are building in Burnside, VIC (near Caroline Springs) and paid a premium for a creek front lot which we'd been waiting 12 months for. To be honest I think we overpaid a bit, but there was so much demand (there were only 6 in the release) that if we didn't buy it, someone else would have. It really comes down to the market and the demand. If they are high, developers can charge a lot. Just hoping when the land does get finally valued around May-June when it titles, that prices won't have dropped by then! Where are you building? Re: Finance Question 8Feb 19, 2016 11:11 am You still need to tell your broker how much you are planning to spend on the building of the house. Then the bank will value your land and take into account your building budget and will give you 'pre approval' for an amount. To have your loan 'unconditional' which is where they actually give you the money, they will probably want to see an actual tender/contract between you and a builder. That's how my bank worked anyway. I would pick a budget for your build and start looking at builders. Follow Our Build Here: viewtopic.php?f=31&t=75667 Building with Kurrajong Homes in Alumuna Walk Village. Re: Finance Question 9Feb 19, 2016 2:23 pm Dani_J Yes, tell me about it! We are building in Burnside, VIC (near Caroline Springs) and paid a premium for a creek front lot which we'd been waiting 12 months for. To be honest I think we overpaid a bit, but there was so much demand (there were only 6 in the release) that if we didn't buy it, someone else would have. It really comes down to the market and the demand. If they are high, developers can charge a lot. Just hoping when the land does get finally valued around May-June when it titles, that prices won't have dropped by then! Where are you building? We are building in Wallan. In the same boat as you we had to secure the block nearly 12 mths from title as it was the last 16m park frontage. With no more parks for at least another 3-4 stages. Our broker is doing pre-approved finance on house and land before it titles. Re: Finance Question 10Feb 19, 2016 2:29 pm Lily123456 You still need to tell your broker how much you are planning to spend on the building of the house. Then the bank will value your land and take into account your building budget and will give you 'pre approval' for an amount. To have your loan 'unconditional' which is where they actually give you the money, they will probably want to see an actual tender/contract between you and a builder. That's how my bank worked anyway. I would pick a budget for your build and start looking at builders. Hi Lily broker has all our things. He said there will be 2 contracts but only 1 loan and he will get pre-approval before land titles. What is a unconditional loan? Is this what you have to have? We have never purchased a home before so everything is new and scary. Re: Finance Question 11Feb 19, 2016 6:15 pm It's two loans. One loan for the land which you start paying off as soon as you settle on the land. And then a second loan, which will be a construction loan while you build your house. Then once the house is built the loan will just be a normal loan. Pre approval is where the bank tells you how much they will lend you essentially. Once you get closer to land settlement then you will need to apply for your loan to be unconditional which is when the bank will actually prepare the money they are going to lend you. I'm a first time buyer as well but I spent a lot of time doing research and going on forums . Once you go through the process you will be a pro! And don't be afraid to ask your broker questions, that's what they are there for. I'm surprised they haven't gone through all of this with you actually. Follow Our Build Here: viewtopic.php?f=31&t=75667 Building with Kurrajong Homes in Alumuna Walk Village. Re: Finance Question 12Feb 19, 2016 7:07 pm Sounds exactly like us Tracey! Lily - great info. Sounds like you are all over it As Lily explained, you don't formally apply for the loan until close to settlement. Until then you can possibly apply for a pre approval where the bank advises how much they are willing to lend you. But as I mentioned earlier that's if the bank is able to value the land without the subdivision being done. In our case, the answer was no, so we had to sign our land contract without any sort of pre approval which was a little scary!!! The only thing we could do was get our broker to crunch some numbers for us beforehand which reassured us we should be approved when the time comes. We actually have an appointment with him tomorrow. Hopefully after that we will have a better idea of how much we can afford/ borrow! Re: Finance Question 13Feb 19, 2016 8:28 pm Dani_J Sounds exactly like us Tracey! Lily - great info. Sounds like you are all over it As Lily explained, you don't formally apply for the loan until close to settlement. Until then you can possibly apply for a pre approval where the bank advises how much they are willing to lend you. But as I mentioned earlier that's if the bank is able to value the land without the subdivision being done. In our case, the answer was no, so we had to sign our land contract without any sort of pre approval which was a little scary!!! The only thing we could do was get our broker to crunch some numbers for us beforehand which reassured us we should be approved when the time comes. We actually have an appointment with him tomorrow. Hopefully after that we will have a better idea of how much we can afford/ borrow! Hope everything goes well for tomorrow Dani. Re: Finance Question 14Feb 19, 2016 9:25 pm Thanks Tracey . Need to also work out if selling current house or keeping as an investment property... If we can afford it! you were just referred to get advice from your solicitor. This is a legal matter. Separately, why would you use a buyers agent for a house and land package? 3 55231 thank you! do we need to get this or our builder before we commence new build on the block? 2 10404 You can really use anything you want the main consideration would be how it looks once painted/finished - or the look you want. Cabinetmakers use MDF because its cheap… 2 9948 |