Browse Forums Home Finance 1 Oct 23, 2010 12:21 am Need help urgently... I have recently been granted a pre-approval construction loan of $450k. My initial plan was to get a house and land package. I found a land in Southern River, WA but the land title is not due till June 2011. The developer is offering a $20k discount if buyer are able to pay a 5% down payment and not subject to financial clause. Which means that I need to settle everything within 21 days upon title issue of land. I am tempted to pay the 5% to secure the $20k discount but am not sure of how this will impact my home loan. Can I actually do that? I understand that most construction loan required a fixed price building contract from the builders and also a building plan approved by local council. However, my builder are not able to come up with a contract till after they have survey the site and done the necessary soil test etc. What can I do to take advantage of the $20k discount from the developer? Can I actually sign the land sale contract not subject to financial clause. Then get my builders to give me a contract with provisional for site works / price increase (as the construction stage is more than 6 months away). Use the land sale contract and building contract to get a secured home loan that will pay the developer on time upon release of land title. Please help. Appreciate comment or advise on what direction should I take from here. Thanks Re: Help!! Construction Loan: Land title not due till June 2 2Oct 27, 2010 4:39 pm Hi kktan9812, Think you are flirting with danger if you are going to sign a contract not subject to finance but you will actually need finance for the purchase, especially if they are telling you that titles ready in 8 months. A lot can change in that time, not only with your personal circumstances but the lenders criteria will have also changed and hence there could be a real possibility that you wont be able to get finance. The other danger is that titles are never released when everyone is saying they will be. I have a client now that is still waiting for the titles after 5 months from when they were told absolutely that they will be released next week, also in Southern River. Instead of going down the path of trying to figure out how you can do this to get a $20k discount why don't you find another block of land in Southern River that has the titles ready now or even about to be released. There is a lot of land in that area so would be surprised if you couldn't find any. If all you need is to settle within 21 days afetr title issue, nearly all lenders can do this as long as you have the loan conditional before the title is released. We have done this a number of times with clients, you just have to get the timing correct as to when you ask for finance. Good luck Good luck Re: Help!! Construction Loan: Land title not due till June 2 3Oct 28, 2010 11:59 am That does sound risky. Also consider that, say, $200k land with a $20k discount can also be seen as $180k land with a $20k penalty. You would need to look at other blocks in the area, particularly those already sold and on the market again if possible, to see the true value of the land. Metricon Riva 33 - http://herlihy-riva.blogspot.com Site start 15/03/2010 - Handover 23/12/2010 9 months and 8 days (284 calendar days) from site start to handover Re: Help!! Construction Loan: Land title not due till June 2 4Oct 28, 2010 12:05 pm You will not actually get a loan until titles are issued. Then the bank will want to value the block then anyway. And if you sign a contract without a finance clause and on the off chance you get denied finance, you will not only lose your deposit but could also be up for some expenses from the developer in regards to them having to 'resell' the block. Re: Help!! Construction Loan: Land title not due till June 2 5Nov 16, 2010 1:03 pm These kinds of contracts annoy me to say the least. Recently i met a client who had signed a similar agreement to purchase a block in North Coogee. They had 12 months to wait prior to titles and paid $80k downpayment on the block. However, between signing and paying and settling on the block the developer DROPPED THE LAND PRICES BY MORE THAN 30%. Needless to say the client was extremely ** off and had numerous heated conversations with the developer. I'd be cautious myself. Espcially if you're tight on funds as the banks could easily get up and walk away from anything - even if you have pre-approval if our economic situation changes in the next 7 months. It's happened to more people than you'd expect over the last 18 months. The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19096 Wow I hadn't realised things had gotten that pricey in just a couple of years since I built, that is crazy with how much land is now costing if you aren't lucky enough to… 3 7102 Flamingo Give me a call and I will do my best to talk you through it. For those who would like an answer, Subject to seeing your actual DA condition, I think you are… 1 4572 |