Apr 24, 2018 9:38 am
Complete 'wet-behind-the-ears' newbie question:
We are considering buying a block of land in a new land release (Googong, NSW). The area is still under development and settlement isn't expected for another 12 months.
Do we get a loan for just the land, and then refinance into a construction loan in a year's time? Or do we get a construction loan now? How does it work?! I've bought and sold property before, but never built so this is new territory for me.
Re: Buying land that won't settle for 12 months... loan opti2
Apr 27, 2018 4:16 pm
When you buy the land now, you will have to finance the (10%?) deposit. Stamp duty if applicable will also have to be paid. Very unlikely that any bank will fund this part of the deal.
When the land settles, you pay the balance from combination of your funds + bank loan. Land valuation will determine how much the bank can fund. At this point you will also pay your lawyer, share of council fees, land tax, estate bond (if any), LMI. The land loan will commence and usually on Principal + Interest.
A further valuation will determine the construction loan criteria and usually this loan is Interest only for say 1 year. This is to allow you more free funds while house is being built. The banks usually merge the land loan and that becomes Interest only as well (till construction finish).
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Thanks, good to know. It would be the same lender.