Browse Forums Buying Land 1 Apr 16, 2011 6:17 pm I just found a block of land that I like (hubby looking at it tomorrow!)..... I spoke with the sales rep this afternoon. He mentioned that the titles are due in October (I know probably later....) and that we could put a $5000 deposit on a block and once titles come through we then pay for the block. He mentioned something about getting "finance approval" and I am not sure whether he means when we put the deposit down? I didn't want to look stupid (totally felt like it though!!!!) so thought I would come on here and ask stupid questions! LOL..... Our scenario is that we were saving for a deposit ($25000 - $30000) by the end of the year, so that we could get a loan of approx $500000 - $600000. We have already got "verbal" approval for the loan, but had to get the deposit first. So my question is - if we put a deposit down of $5000 now, and then once we have saved the rest (by end of year) we then apply for loan and pay the block and then commence building..... does that sound right????? Please slap me over the head if you think I need it! I think I am just soooo excited that I found a block of land I love! Re: paying deposit on land.... then finance??? 2Apr 16, 2011 9:15 pm Generally you put the deposit on the block to hold it while you secure financing. You actually sign the contract when the deposit goes down and you are bound to purchase the land when it titles, unless your financing falls through. The contract will be subject to financing for about 30 days, after which time you will be bound to buy the land at settlement regardless of whether you have financing or not. Being declined finance is the only reason you can get out of buying the block, you can't simply change your mind. Be careful when dealing with your bank. Finance approval is usually only valid for 6 months, and if you titles are in october (realistically that's probably February the following year) finance will expire before you pay for the land, try and get them to commit to being flexible about this. So in essence yes you can put the $5k on the block and wait until closer to title to secure financing. But be aware that this is a risk and you will be obligated to buy the block when it titles even if financing is declined and you are literally unable to, because it's more than 30 days from signing the contract. Matt's Brando: viewtopic.php?f=31&t=46340 Started March 30th 2011 PCI July 15th Re: paying deposit on land.... then finance??? 3Apr 16, 2011 9:23 pm Thanks for your reply Matt.... I remembered the sales guy saying something about 3 months they will wait for finance after titles come? does that sound right to you? I said to hubby that titles probably won't be available for an extra 2 - 3 months after October - so that would be okay as it would give us more to time to save extra deposit etc... does that sound feasible? I was just a bit unsure whether the sales people would require proof that we will be able to get the loan when we pay the deposit or are they not worried about that? more wanting you to sign? Re: paying deposit on land.... then finance??? 4Apr 16, 2011 9:43 pm mapcalla I remembered the sales guy saying something about 3 months they will wait for finance after titles come? does that sound right to you? Usually you must settle within 10 days of title. Quote: I said to hubby that titles probably won't be available for an extra 2 - 3 months after October - so that would be okay as it would give us more to time to save extra deposit etc... does that sound feasible? It's a risk. Quote: I was just a bit unsure whether the sales people would require proof that we will be able to get the loan when we pay the deposit or are they not worried about that? more wanting you to sign? I think they record info about who you will be lending with, how much, and when it will be approved (usually 30 days, as I said) when you sign the contract, but it's up to you to follow up on it. The risk is yours. The worst case scenario for the developer is they keep the land and your deposit (and still have the option of suing you for further damages) if you don't come up with the balance on the day. I think the intention is that you pay the deposit and then immediately (i.e. within 30 days) secure financing. You could do as you say and leave financing but you're assuming a big risk. Matt's Brando: viewtopic.php?f=31&t=46340 Started March 30th 2011 PCI July 15th Re: paying deposit on land.... then finance??? 6Apr 18, 2011 2:57 pm Just spoke with finance guy and also sales rep for the land.... they both talked (jargon city! and was doing my head in!).... but all good. the owners of the land say that if you can't get approval, then the deposit is refundable. WOO HOO! So we can get conditional approval from mortgage people, pay deposit and then when titles come through and we have our full deposit for house and land.... we can go ahead!!! so we may have found our block of land..... fingers crossed! I am all at once!!! Re: paying deposit on land.... then finance??? 7Apr 18, 2011 6:47 pm Sounds like you've made the decision but I just wanted to reassure you thats what we did. Camped out and paid the deposit for the block last June and since titles were finally issued last week I've been running around getting the finance sorted, hasn't been an issue. Hope your wait for titles is shorter than ours! my new build thread- Ben Trager https://forum.homeone.com.au/viewtopic.php?f=31&t=89826 my switch build thread (2011) https://forum.homeone.com.au/viewtopic.php?f=31&t=36569 Re: paying deposit on land.... then finance??? 8Apr 18, 2011 8:03 pm tinkster Sounds like you've made the decision but I just wanted to reassure you thats what we did. Camped out and paid the deposit for the block last June and since titles were finally issued last week I've been running around getting the finance sorted, hasn't been an issue. Hope your wait for titles is shorter than ours! Thanks tinsker! I hope so too but am not holding my breath.... I think it may be Nov/Dec/Jan... at least it gives us time to save more money.... our mortgage guy is excellent as well! Re: paying deposit on land.... then finance??? 9Apr 19, 2011 2:06 am Hi, What your doing is very risky: 1. You only received a "verbal" approval = means nothing! 2. Depending what your contact conditions are- you may lose the deposit if you don't go ahead with the sales/finance - depends what it says on your contact. 3. Bank will only give approval based on what you have NOW...not what you "will/could" save by the time it hits settlement If i was you, i would Atleast as a min apply for a written" pre-approval" before considering any deposit amount and getting your conveyancer to check your loan docs for you as well- so you understand each condition. Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au paying deposit on land.... then finance??? 10Apr 19, 2011 7:41 am Plus stamp duty will need to be factored in. Re: paying deposit on land.... then finance??? 11Apr 19, 2011 10:08 am We just made our subject to finance, and then if we hadn't got it, we'd have got our deposit back If we'd had approval for our block when we signed the contract, given that was 10 months ago, we'd have had to go through the application again anyway! my new build thread- Ben Trager https://forum.homeone.com.au/viewtopic.php?f=31&t=89826 my switch build thread (2011) https://forum.homeone.com.au/viewtopic.php?f=31&t=36569 Re: paying deposit on land.... then finance??? 12Apr 19, 2011 10:27 am tinkster We just made our subject to finance, and then if we hadn't got it, we'd have got our deposit back If we'd had approval for our block when we signed the contract, given that was 10 months ago, we'd have had to go through the application again anyway! That is what we are doing as well..... also put in there subject to Mortgage House finance to narrow it down, so they can't make us go with anyone else just to get finance. We will also get our deposit back and also getting a letter subject to 5% deposit etc etc.... all covered.... Can someone please offer some advice? Im DESPERATE. Because I'm completely and utterly exhausted. How long are variations taking with other companies at the moment? We… 0 18466 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 56283 In NSW the maximum deposit for building work is 5% until the builder provides HBCF insurance 1 4821 |