Browse Forums Home Finance 1 Aug 09, 2009 8:29 pm Hi all Just to set it up, Im in my early 20's, low debt, at home with largely disposable income, in a stable job that ive had for 4 and a half years and it looks like in the next year ill be promoted. Im not quite in a position to be able to get the whole kit and kaboodle just yet, over the past couple years and directly ill be spending quite a bit $$ on various things however I want to start thinking about the future, the way I see it I have 2 options... What my instinct is telling me is to buy a block of land now. Although I dont have $$ for a deposit I have a couple of collections that I could cash in reasonabely easily that would give me deposit $$. Spend a couple of years paying off as much of that as possible and getting stuff that ill need to move into a house. The other is to do the whole savings thing, then when it does become feasable buy the lot then. I can save, though I know that having $$ around I wont save as much as if im paying off a loan on a block I already own... Is the idea of just getting the block now sensible? Im not looking at anything extravagant (for those in SA, im thinking something modest around Murray Bridge or out north) and I could comfortabely make repayments twice as much as what mortgage calculators say, but would probably do something like half as much and start buying furniture and the like... I tried to search on this topic, but things like 'land loan' are very generic given the nature of the forum, the few threads I did find suggest that most of the majors have land loan products, yet I could only really find the ANZ land loan, am I missing something? Is it something that most of them have but dont advertise? If I do buy the land and pay off much more than the required payments, but dont save massive amounts, will the bank look at it and go "Well yea, hes a sound guy to give $$ too" or will they still expect a deposit for a contruction loan? Or am I stupid for even considering this and should I just plow $$ away into a savings account for a while? Any incite is greatly appreciated Re: Buying Land now? 2Aug 09, 2009 9:06 pm hey lackie, here's my thoughts! You should def buy land if you can afford it. I think the bank will want a deposit and they may want you to have the funds to cover the purchasing costs too (eg. mortgage insurance, conveyancing etc). So give a lender a call and ask them what costs you will be up for to buy the land, and how much deposit they want. The more deposit the less you have to lend and the less you have to repay, BUT, always try to keep a small "slush" fund somewhere for a rainy day (eg unpaid sick leave, job loss). It might come in handy for other emergencies anyways... All lenders will write "land" loans (as you call it) and when you go for the loan to build, your land will have increased (I generally believe 10% a year - but that's just my rule of thumb) so when you go to build in couple of years, your land will have increased in value and you can borrow a bit against it. It may help you build, but it wouldn't make a big difference (but every bit counts right!) There's just one thing to remember with "land only" purchases, there is no income possible. Hence you have to pay the whole loan. If your intention is def to go build on it in a couple of years, then go for it. If you are looking at it as purely an investment, then buying a cheap unit which can be rented out would be worth considering. I think the savings ideas is a better one if you can't get on the property ladder now. Property just keeps going up, and your savings could not compete with that increase. But if you can't get the loan because of lack of funds, then def do the savings until you do qualify. Where you buy in SA is up to you, I live in Vic so I can't advise you on that. I hope this helps, cheers A thankful person is a happy person. [/color]My hobby design blog: http://aviewondesign.blogspot.com/ Re: Buying Land now? 3Aug 10, 2009 9:41 pm Talk to the bank about what they will requier for a deposit. You will need atleast 5% possibly 10% of the land value for a deposit which must be held in your account for a minimum of 3 months. No last minute (within 3 months) cash injection into your account. Once you have this, the bank will need to value the land at what you are paying for it or you will need to save up the balance to meet this. You will also need to save up the stamp duty and mortgage insurance as the bank will not lend you more than what the land is worth. Forget forum advice, go straight to the bank you intend to get the loan with. Re: Buying Land now? 4Aug 13, 2009 3:45 pm my 2 cents and im no expert if your not paying rent and your expenses a kind of low I say BUY IT. if you put your cash in the bank it will give you back a measly 3.5% per annum which you can purchase the inflation on your money with (a joke ) then will have to pay tax on it. Whereas if you purchase land you will have bought something that will appreciate (hopefully) and because you will be residing in it (as well as get free stamp duty) you will not have to pay tax on the land appreciating. In a way the home loan interest rate works out to be roughly your investment rate as you don't pay interest on what you saved (by paying the mortgage and putting savings in) and the value of the land increasing. I hope you can understand what I mean. goodluck with it though Villina with Trend facade Sydney Re: Buying Land now? 5Aug 13, 2009 3:52 pm Go and have a quick chat to a lender / broker who will advise whether the lending side is feasible. If it is and you are willing to pay off the loan over the coming years then it will always be a good thing. My DH did exactly the same thing. He bought land when we were 24, paid it off over the following 4yrs then when he was 30 he built a gorgeous home. That way he only had to borrow for the home so had masses of equity in the land to use as deposit for the home. Of course it helps when you live at home and have minimal outgoings - exactly DH's situation as well. It really set us up well (along with me buying a cr@ppy cheap home before the boom which tripled in price over the following 7yrs). Good luck with your queries. Some things are worth waiting for. Re: Buying Land now? 6Aug 14, 2009 7:20 am if you play your cards right you might be able to get a real good deal now or in about 2 months when first home buyers withdraw their interest in buying vacant land because there is no more incentive to buy. It happened to me (well i think i got a good deal). I purchased in june (when everyone thought the grant was finishing up) and managed to buy a 600m2 block of land for the same as what the 500m2 land went for. so make sure you neogociate. that is when the biggest savings are made Villina with Trend facade Sydney Yeah I don't know why I came to a forum. Place is full of wierdos/pedos thought internet may help but I suppose I'll try my luck with someone in person. Cheers. I tried… 0 6444 9 24795 This is one of the reasons I decided to go overseas for my double glazed windows. As the builder indicated, he's worked on many upmarket builds, these were the most well… 13 19245 |