Land Loan and Construction Loan Sequence

Hi all my first post here.
I found a block that I am keen to build my holiday home and currently discussing with my builder with an estimated cost 350k to build.
Land value is about 180k.

My finance on this project will be subject to the sale of my another investment property, which should draw out ~330k cash. So, looking to have a total loan amount of 200k.

The 25k home builder grant is definitely a plus and I am hoping to sign in a building contract my end of this year to meet one of its many criteria.

I am having my broker working on my pre approval on the land and construction loan now.

My question is by what stage I need to have my 330k cash from the sale of my IP in place, in order to have a formal building contract signed?

Technically you can have your building contract formally signed at any point. That is between you and the builder.

However in terms of the loan, you will have to show evidence that you have access to the funds to complete of $330K before a lender will approve. At a worst case scenario, this will be a fully executed sale of contract showing that the property has been sold and what the outstanding loan (if any) is still against it.

Cheers,

Tom

I work in credit at the bank and all you have to provide is copy of the contract to confirm the sale price of the investment property being sold and and loan statement if the property has a mortgage on it. This is to confirm the net proceeds from the sale is $330k.

There will then be a settlement condition from your bank confirming your partners property has been sold and existing loan paid off. This settlement condition can happen before or simultaneously with your land and build loan.

Subject to their being a confirmed sale, yes.

Thanks everyone. I found it very useful.