Browse Forums Home Finance 1 Jan 05, 2010 8:04 pm Hello guys, This is my first post in this forum. I'm kind a confused on how much personal funds that I needed when it comes to land settlement. Here's some background info about my situation. I'm a first home buyer and planning to build a house in Melbourne's western suburbs. Signed contracts for the land and already paid 10% deposit on that. The land is to be released in March 10'. I got a conditional approval for a 90% (300k) loan subject to valuation. The builder asking for a 5% deposit which will be after the land settlement. I signed the building contracts in Dec 09' so will be getting 25k from FHOG. My questions are, 1. Can the stamp duty to be included in to the loan or do I need to pay it out of my own funds? 2. Can the 5% builder deposit be taken from the mortgage rather than out of my own funds? 3. What other expenses such as government charges, legal fees, etc. that I need to pay from my own funds. 4. When will I get access to FHOG? I'm in a bit of a tight spot as I had to pay off a personal loan as part of a condition in the conditional approval which I earlier didn't planned for. My broker is on holidays and can't get an answer from her until Friday . many thanks, Danu Re: Need some help in finding out how much funds needed... 2Jan 05, 2010 10:22 pm Can't speak for everyone, but we only paid 10% deposit on our land ($13k) and everything else was covered by our loan(s). Only other expense we had was for our conveyencing fee, which was something like $120 or $200 (can't remember exactly, it was 3 years ago), but all other things like conections, stamp duty etc was all accounted for in the amount we borrowed. Our builder required progressive payments, the first payment was to start the building process off, then periodically when certain aspects of the build was complete. When payment was required they sent us an invoice for work performed, where we would then sign a form allowing the bank was to pay the invoice amount on our behalf. Our FHOG came through right at the very end, after certificate of occupancy had been issued and we had moved in. Seemed all too easy when I look back on it Cheers Re: Need some help in finding out how much funds needed... 3Jan 06, 2010 8:15 am danu Hello guys, This is my first post in this forum. I'm kind a confused on how much personal funds that I needed when it comes to land settlement. Here's some background info about my situation. I'm a first home buyer and planning to build a house in Melbourne's western suburbs. Signed contracts for the land and already paid 10% deposit on that. The land is to be released in March 10'. I got a conditional approval for a 90% (300k) loan subject to valuation. The builder asking for a 5% deposit which will be after the land settlement. I signed the building contracts in Dec 09' so will be getting 25k from FHOG. My questions are, 1. Can the stamp duty to be included in to the loan or do I need to pay it out of my own funds? 2. Can the 5% builder deposit be taken from the mortgage rather than out of my own funds? 3. What other expenses such as government charges, legal fees, etc. that I need to pay from my own funds. 4. When will I get access to FHOG? I'm in a bit of a tight spot as I had to pay off a personal loan as part of a condition in the conditional approval which I earlier didn't planned for. My broker is on holidays and can't get an answer from her until Friday . many thanks, Danu 1. Stamp duty can be included in your loan, however it does effect your borrowing amount so you need to ensure your LVR is still within the amount the bank is willing to lend you. 2. We paid our builders 5% deposit from our own funds. 3. At land settlement we've been advised we'll have to pay our conveyencer, any council rates, water rates etc we have been advised to allow up to around $1500 for the council/water rates/misc charges etc seperately to the conveyencing fees. 4. In terms of the FHOG, we're using ours as part of our loan deposit so it will go directly to the bank as it makes a sizeable chunk of the deposit as well as bringing our borrowing amount down and hence from the lower LVR around 84%, we have less LMI added to the loan. Our Build - Places Fairhaven 23+ - https://forum.homeone.com.au/viewtopic.php?f=31&t=28045 Our Landscaping - Belial's Backyard - https://forum.homeone.com.au/viewtopic.php?f=19&t=45375 Re: Need some help in finding out how much funds needed... 4Jan 06, 2010 9:46 am Hello Everyone, Just some quick info here. Based on a purchase of $300,000.00 for the land with a 10% deposit the 'government' fees and charges would be approximately as below: Transfer Fee: $858.00 Stamp Duty on the property: $11,370.00 Stamp Duty on the loan: Nil (in Victoria loan and property stamp duty are one in the same, other states have these seperately). Mortgage de registration and re registration costs: $294.00 On top of these you will have your lenders charges. These may include but might not be limited to the below: Establishment fees Legal Fees Settlement Fees Title Searches Mortgage Insurance Valuation Fees Progress Draw Fees These all vary depending on the lender. As for the funds you will require. The 5% deposit generally needs to be made by yourself to the builder. This is usually as an up front portion (to cover the engineering up front costs etc) and then the remainder prior to the builder heading out to the site. If you are lending to 90% on the land already and 90% is the limit of your loan then the bank will NOT fund this deposit as there is no equity available to fund this against. In your situation with a 10% deposit down on the land and a loan to value ratio of 90% you should check with you lending institution whether they can lend to 95% or if your lending is 90% with the fees and charges capitalised over and above that. I have put together some rough figures below to demonstrate why you need to confirm with your lender: Land Purchase $300,000.00 Government Fees and charges $ 12,522.00 (estimated) Bank Fees and charges $ 4,130.00 (estimated based on $600 estab, $300 progress draw, $3,200 mortgage insurance, and $30.00 title search) Total Funds required $316,652.00 Minus deposit paid $ 30,000.00 (10% of purchase price) Remaining funds required $286,652.00 Lending from insitution $270,000.00 (based on 90% inclusive of fees) Shortfall $ 16,652.00 (funds required from borrower) Lending from institution $273,200.00 (based on 90% plus mortgage insurance) Shortfall $ 13,452.00 (funds required from borrower) Lending from institution $285,000.00 (based on 95% inclusive of fees) Shortfall $ 1,652.00 (funds required from borrower) Lending from institution $288,200.00 (based on 95% plus mortgage insurance) Shortfall $Nil (funds to complete provided by the lender) Further to this. Most lenders will allow you to surrender the Fhog to them as part of a deposit towards lending. So they may in fact be able to include the $25,000.00 into the funding equation as a further deposit. In this case any of the above scenario's would be satisfied as the full Fhog would be enough to cover the shortfalls presented. However, depending on how much of the Fhog is required to payout your personal loan will show whether there is enough to cover the shortfall presented above. Just remember, if your lender does ONLY a 90% lend. That is a 90% lend for the land and 90% for the construction. I am assuming that the land is $300k and you are constructing for above that say for ease of figures a $200k build. This means you have already provided 10% deposit towards the land of $30k, you will still need to cover 10% of the build amount, plus fees and charges to keep the lending at 90%. If the lender is a flat 90% lend and nothing above. You have to use your own funds plus the Fhog to cover the following costs: The personal loan payout = ??? The bank fees and charges = $ 4,130.00 The government fees and charges = $12,522.00 10% of the construction cost (5% up front deposit) = $10,000.00 up front $10,000.00 to make up the other 5% I would recommend clarifying with your broker or lending institution as to what the fees and charges are and how 'they' handle the Fhog and the fees etc. I am only speculating at current as to your entire situation. The other thing to clarify with your broker/lender is how they conduct their valuations. Do they use only the raw cost of the building contract plus the land purchase price. Or do they use the land purchase price plus the end value of the construction. This will make a big difference in how much they will lend towards your build. I do hope the information I have provided can assist you somewhat. Regards, Trent Davidson Property Finance Consultant Residential Lending LJ Hooker Finance Brisbane North Credit Representative Number: 387283 under Australian Credit Licence:380270 Re: Need some help in finding out how much funds needed... 5Jan 06, 2010 3:08 pm Trent Davidson Hello Everyone, Just some quick info here. Based on a purchase of $300,000.00 for the land with a 10% deposit the 'government' fees and charges would be approximately as below: Transfer Fee: $858.00 Stamp Duty on the property: $11,370.00 Trent, For a broker you have overlooked something. Theres no stamp duty on the construction, only the land component. The stamp duty will not be any more than 4.5K in the western suburbs of Melb. Re: Need some help in finding out how much funds needed... 6Jan 06, 2010 3:48 pm Hello, The stamp duty has been calculated based on $300,000.00 for the land alone with lending of $270,000.00 (90%) towards that. The post provided originally does not state how much the construction is for at all. By your calculations of $4,500.00 stamp duty your assumption is that the land is valued at around $160,000.00-$165,000.00 and that the remainder is for construction. If I have misread the original post then I do apologise. If the original poster could clarify how much the land is being purchased for and how much the build is for I will amend my figures etc. My assumptions were taken that the 90% approved lending was for the land alone as the construction phase would need to be a seperate loan. Due to the land not being released until march I would assume that it is not titled yet. As such the lender cannot provide full approval on both the land and construct as the construction details havnt been able to be prepared and submitted to council as yet. The figures I have presented are based on those provided in the original post. With further information I can be more specific. This is why I had referred the original poster back to their broker/lender. Due to there being SO many variables when it comes to lending in particular construction loans etc. Elastic thanks for the pickup on the full $300k being stamped in my post. However, this is under the assumption that the $300k is for the land alone. Perhaps Danu can clarify the land amount compared to the construction amount. Regards, Trent Davidson Property Finance Consultant Residential Lending LJ Hooker Finance Brisbane North Credit Representative Number: 387283 under Australian Credit Licence:380270 Re: Need some help in finding out how much funds needed... 7Jan 06, 2010 3:58 pm Trent Davidson Hello, The stamp duty has been calculated based on $300,000.00 for the land alone with lending of $270,000.00 (90%) towards that. The post provided originally does not state how much the construction is for at all. By your calculations of $4,500.00 stamp duty your assumption is that the land is valued at around $160,000.00-$165,000.00 and that the remainder is for construction. If I have misread the original post then I do apologise. If the original poster could clarify how much the land is being purchased for and how much the build is for I will amend my figures etc. My assumptions were taken that the 90% approved lending was for the land alone as the construction phase would need to be a seperate loan. Due to the land not being released until march I would assume that it is not titled yet. As such the lender cannot provide full approval on both the land and construct as the construction details havnt been able to be prepared and submitted to council as yet. The figures I have presented are based on those provided in the original post. With further information I can be more specific. This is why I had referred the original poster back to their broker/lender. Due to there being SO many variables when it comes to lending in particular construction loans etc. Elastic thanks for the pickup on the full $300k being stamped in my post. However, this is under the assumption that the $300k is for the land alone. Perhaps Danu can clarify the land amount compared to the construction amount. Regards, I just reread the first post, and agree very misleading, but being from Melbourne I think its a House & Land around 330K thus the loan has been approved at 90% at 300K loan. You wouldnt by land for 300K in the western subs of Melbourne being a first home buyer Re: Need some help in finding out how much funds needed... 8Jan 06, 2010 4:15 pm We wont know until Danu clarifies. He is asking how much he needs to tip in to the lend then I need definitive figures to calculate from. There is no point in speculating. Land can be purchased in Drummond for $310k or in Gisborne for $300k or Bacchas Marsh for $339k or alternately in Riddells creek for $158k , Taradale $250k, Kuranjong $230k, Melton West $148k. There is no way to know how much the land is based on 'west of Melbourne' and the other information already provided. Regards, Trent Davidson Property Finance Consultant Residential Lending LJ Hooker Finance Brisbane North Credit Representative Number: 387283 under Australian Credit Licence:380270 Re: Need some help in finding out how much funds needed... 9Jan 06, 2010 6:25 pm Hello guys, Thank you very much for all your replies. Really appreciate it. Trent, Sorry, if I was unclear in my previous post. The total amount of the loan is 300k (for house and land). Cost for the land is 150k and for the building it is 180k. So the total cost for house and land comes to 330k. I'm going for a 90% loan, so the loan amount will be around 300k (without taking other costs into account). Using the calculator at SRO website stamp duty for the land comes to around 4k. Trent Davidson If the lender is a flat 90% lend and nothing above. You have to use your own funds plus the Fhog to cover the following costs: The personal loan payout = ??? I have already paid the personal loan amount and it has been closed. Dirtyard Darren Can't speak for everyone, but we only paid 10% deposit on our land ($13k) and everything else was covered by our loan(s). Only other expense we had was for our conveyencing fee, which was something like $120 or $200 (can't remember exactly, it was 3 years ago), but all other things like conections, stamp duty etc was all accounted for in the amount we borrowed. Quote: Further to this. Most lenders will allow you to surrender the Fhog to them as part of a deposit towards lending. So they may in fact be able to include the $25,000.00 into the funding equation as a further deposit. In this case any of the above scenario's would be satisfied as the full Fhog would be enough to cover the shortfalls presented. If this is the the case with my lender it will be a huge relief. Quote: Just remember, if your lender does ONLY a 90% lend. That is a 90% lend for the land and 90% for the construction. Does that mean If I go for 90% I have to pay 10% for the construction out of my own fundings? Thanks again for all your help. Danu Re: Need some help in finding out how much funds needed... 10Jan 07, 2010 11:55 am Based on a purchase of $150,000.00 for the land and $180,000.00 for construction with 10% deposit (made up of Fhog and savings) the 'government' fees and charges would be approximately as below: Transfer Fee: $489.00 Stamp Duty on the property: $3,870.00 Stamp Duty on the loan: Nil (in Victoria loan and property stamp duty are one in the same, other states have these seperately). Mortgage de registration and re registration costs: $294.00 On top of these you will have your lenders charges. These may include but might not be limited to the below: Establishment fees Legal Fees Settlement Fees Title Searches Mortgage Insurance Valuation Fees Progress Draw Fees These all vary depending on the lender. I have put together some rough figures below to demonstrate: Construction cost $180,000.00 Land Purchase $150,000.00 Government Fees and charges $ 4,653.00 (estimated) Bank Fees and charges $ 4,130.00 (estimated based on $600 estab, $300 progress draw, $3,483 mortgage insurance, and $30.00 title search) Total Funds required $338,000.00 Minus deposit alread paid on land $ 15,000.00 (10% of land purchase price) Remaining funds required $323,783.00 Lending from insitution $300,000.00 (this is 90.91% of the value. $297,000.00 is 90%, it 'appears' this lender allowed 90% lend PLUS mortgage insurance but I will run figures based on this not being included) $323,000.00 - $300,000.00 = $ 23,783.00 (funds required to complete purchase) $25,000.00 being the Fhog from the government. Which more than covers the costs to complete as above. This leaves roughly $1,200.00 which could reasonably be attributed towards legal costs & searches. Something that you will still need to clarify with your lender is if they will 'fund' the deposit required for the construction. If they are not willing to 'fund' this prior to the slab going down you may need to put this deposit down and then have the builder/lender reimburse you this deposit after first draw down. So this 5% cost may be the only further funds you need to put into the deal being $9,000.00 (which could be fully reimbursable at the very latest on final drawdown of the loan). I hope the amended figures help out. Cheers, Trent Davidson Property Finance Consultant Residential Lending LJ Hooker Finance Brisbane North Credit Representative Number: 387283 under Australian Credit Licence:380270 Re: Need some help in finding out how much funds needed... 11Jan 07, 2010 8:00 pm Hi Trent, Thank you very much for your very informative reply. I'm going to get things confirmed when my broker returns from leave tomorrow. Fingers crossed that bank will agree to fund the stamp duty and the 5% builder deposit. regards Danu Re: Need some help in finding out how much funds needed... 12Jan 09, 2010 4:27 pm Something else about the stamp duty too. As mentioned previously I too highly recommend that you pay it up front and not include it in your mortgage if you can help it. (Why pay interest on something that is NOT going to increase in value?) Keep in mind that in most cases in Victoria the stamp duty fees are handled by a 3rd party acting as agent for the government, and not your conveyancer. They will attempt to retrieve the funds out of your nominated account approx. 5-6 weeks after land settlement. Normally this is the same account that the mortgage repayments will be coming out of. Make sure that you keep the funds available in the account for the duration or you might get stung with a surprise overdraft fee from the bank if theres not enough in there! I got caught out when I was FHB as I moved all the remaining funds after settlement from my account into a netbank saver while i was waiting for the house to be built. They dont give you much warning either, just an approx 5-6 week waiting period before they hit you up for it. Hi VK, Think it's worth investing time in an Owner Builder course to equip you with basic knowledge on Australian Building Industry and its regulations. Also, I suggest… 11 23689 Hi Kateo, Are you able to spare any of the tiles? Thanks Tony 10 11408 in the stormwater pit or the drain? Those dont look like theyd fit in the drain. Separately, the pits do get stuff in them during the course of the build. For the most… 1 7942 |