Land loan & construction loan

Hey guys,
First home buyer here seeking some advice!
Just wondering who here got a land loan and then a construction loan?
Is there anything you regret about doing it?
Was the process easy?
What lender did you go with?

I purchased land, then got a loan for the construction. I did it that way because I couldn't afford to pay the build deposit at the same time. I went with Westpac, not a fan of them.. but hey they did lend me money I went through a broker, my broker is fantastic.

I don't regret anything about it, my broker made it seamless for me. What I did like about it was I had full choice of land in the estate, and I wasn't tied to any particular builder. I've also been told that estates tend to sell land to builders in a package, and they don't always give them the best blocks (not sure how true this is). So through house and land you may not get a pick of the best blocks.

We did a land loan and construction loan separate.
Process was easy for us.
We went with the Newcastle Permanent.
The reason why we chose the loans separate is because we wanted to settle on the land and we hadn't 100% confirmed our plans with our builder. So decided to settle on the land and fix our home loan rate. Then did a construction loan a couple of months later.
Only slight annoying thing was that when we applied for the construction loan after settlement of the land, the LMI hadn't been received on QBE's end from our lender (even tho we paid it on settlement) as the Perm do 2 batch payments a month with other people's LMI so we had to wait 2 weeks for the payment to go through as the calculations were including both payments of LMI if that makes sense.


Building with Perry homes: viewtopic.php?t=84756

We did land and then construction once we sorted a builder and was told it would be interest only until we moved in as we are renting but it's not. Went through NAB and wouldn't recommend them at all. If I had seen the reviews online I would never ever gone with them. Stay clear! We got mucked around for six weeks where I had to constantly ask what was happening as the communication was so poor.

We can't split ours and it's been a nightmare. We couldn't get a fixed price until the land registered, but needed to settle on the land 2 weeks after registration.

Needless to say we've had to ask for 2 extensions because the contact for the build took 3 weeks to be ready. Now finance is going to take another 3 weeks.

If you can split them it's a lot less stressful.

Coral Homes - Modified Grange 23

My Thread: viewtopic.php?t=85959

We had to do them separate due to not having access to the and until settlement so that we could finalise the build contract price. The loan deals did get worse while we were sorting out build contract so it would have been better if we had been able to do them together but it could easily work the other way too.

We went with Westpac through a broker. Broker great, Westpac not impressed. Coming from commbank their online banking feels like 5 years ago. I'll update my thread with more on my issues with them as soon as we get it sorted out .

Ours was the same! Our broker really didn't want us to do a spilt loan so we kept extending our settlement. From when we signed the land contract to settlement was 3 months difference. Luckily our builder has been very quick with contracts and variances though!

Hi guys, is it possible to go for land lone only and then go for construction loan after 10-12 months? Would that be. Big loss?

I believe you can. That is sort of what i did..I got joint preapproval...then unconditional on land only 2014...when my land settled 2016 atarted to make repayments. Month later signed build contract and merged the loans.

With you on this. NAB, whilst overall a good bank was a bit of a nightmare to deal with.

In our case separate land and interest only build loans, which rolled into one 12 months after the build process first started.

First issue we had was the builders payment schedule didn't suit the bank, so had to get builder to change that. Mind you this was done after we had already commited, but before loans were signed, and to back and forth almost cost us the land and build deposit.

Last payment was also a bit touch and go, though in this case I blame the builder for not allowing enough time for the bank to do what they need to do, but in the end got there.

The weird one was the combining of the loans. As we had sold another house we wanted to sort it all out more or less once construction ended, but the build loan still had 3 months of interest only. The thing was to combine them early meant applying for a new loan, or waiting 3 months when it was then possible.

Also once our old house was sold the excess money we had was not offset against the land loan properly, so we had $300k in cash, $300k in land loan but still paying interest. Though must admit NAB were good in repaying the interst we would have not paid had the offset been done the way we instructed. Easily proved as the instructions were in email.

I built in 2000 using Bank West (prior to their take over by Com Bank) and they were much easier to deal with that's for sure.

god now I'm not looking forward to combining the loans - another hassle!

Well if you let it go it happens automatically. In our case we wanted to speed it up by a few months. In end easier to let it run it's course.

We also did a separate land loan to construction loan.

We couldn't afford to build at the time, however we found a block of land for an unbeatable price. With the prices just going up and up we decided to buy the land.

Our land was 6 months late on titles, so we have only had the land loan for 5 months. We are now applying for a construction loan.

Only negative was that the rates offered to us were not very good for a land only loan. Also, some lenders wanted a huge deposit. We went with Westpac as they were happy to only take a 10% deposit. Some lenders wanted up to 30%.

Do you mind me asking what rate Newcastle permanent gave you - my broker has only put forward NAB and Suncorp for our build loan, and they are significantly more expensive than our current ING loan.

Sorry late reply. 3.84% variable


Building with Perry homes: http://forum.homeone.com.au/viewtopic.php?t=84756

Brilliant, I will get my broker to look into them as well

This is all very useful information as I'm heading down this track over the next 2 years.

When it comes to a construction loan, whats expected financially upfront for a deposit?
I feel this will me the major mood killer in making this work efficiently

I have a minimum of 12 months till settlement, a further 12 months to start the build and 24 months in total from settlement to when we need to be residents

Hello,
Similar experience to those above.

We were never expecting to build but found a good block in Albury for 146k.

Didn't want to rush the build process so we got a land loan through a broker (ANZ 4.03%). We put down a 10% deposit but ANZ and NAB asked for 5%, perhaps considering our savings history and no other debt.

When construction starts next month or so our construction and land loan will combine, still at 4.03% and we will pay interest only till completion.

To complete the build ANZ has asked for another 5% of the build price, however we will put down about 12%.

Hope that helps happy to answer other questions.

In our case we put all we wanted to contribute into the land loan to keep it as small as possible and avoid LMI. Then when it came time for the construction loan we used the equity in the land as the deposit. Anything we saved in the meantime we held on to for post handover things.