Browse Forums Home Finance 1 Sep 19, 2012 7:39 pm Hi All, Just have a question... DH and I are looking at building a house in NSW. We will need to get a loan for the house and land. We have a 10% deposit. We don't want a house and land package as we want to feel free to use any builder. Our question is, How do construction loans work? Do we put a deposit on the land and then find the house we want and then go to the bank for a loan? Or.. Do we get seperate loan for the land, then seperate loan for the house which means we would need double the deposit amount... Apologies in advance if this is a silly question ! We are a bit confused at how the loans work! Thank you in advance! Lexia Slim Twist with Beechwood Homes http://houseoflexia.blogspot.com.au/ https://www.instagram.com/natlyn7/ Re: Construction Loan 2Sep 19, 2012 7:50 pm natlyn Hi All, Just have a question... DH and I are looking at building a house in NSW. We will need to get a loan for the house and land. We have a 10% deposit. We don't want a house and land package as we want to feel free to use any builder. Our question is, How do construction loans work? Do we put a deposit on the land and then find the house we want and then go to the bank for a loan? Or.. Do we get seperate loan for the land, then seperate loan for the house which means we would need double the deposit amount... Apologies in advance if this is a silly question ! We are a bit confused at how the loans work! Thank you in advance! Not a silly question! It confused me also - I bought land previously to buying a house but a construction loan combines them. The abnk paid out my land loan with the construction loan then I only paid interest on the stages that have been completed while the house was built. I would go to the bank to see how much you can borrow then you can go back once you have decided on house/ land. I paid a deposit for the land and then a deposit for the house .. isn't the deposit based on the amount? So you should pay the same whether house and land or buying separate. Re: Construction Loan 3Sep 19, 2012 10:05 pm Victoria_g06 Not a silly question! It confused me also - I bought land previously to buying a house but a construction loan combines them. The abnk paid out my land loan with the construction loan then I only paid interest on the stages that have been completed while the house was built. I would go to the bank to see how much you can borrow then you can go back once you have decided on house/ land. I paid a deposit for the land and then a deposit for the house .. isn't the deposit based on the amount? So you should pay the same whether house and land or buying separate. Thank you. We already know how much we can borrow and have based the 10% off that amount. We just would rather get one loan at the same time. I guess we need to speak to the bank and find the house/land. Lexia Slim Twist with Beechwood Homes http://houseoflexia.blogspot.com.au/ https://www.instagram.com/natlyn7/ Re: Construction Loan 4Sep 20, 2012 9:48 am Hi Natlyn, we also had land and build seperate (not a house and land package), but when appling for the loan we applied for land loan and construction loan at once (So to the bank, it's just like a house and land package), it was less hassle. good luck Re: Construction Loan 5Sep 20, 2012 5:38 pm sfern Hi Natlyn, we also had land and build seperate (not a house and land package), but when appling for the loan we applied for land loan and construction loan at once (So to the bank, it's just like a house and land package), it was less hassle. good luck OK so that is probably what we should do, thank you! Lexia Slim Twist with Beechwood Homes http://houseoflexia.blogspot.com.au/ https://www.instagram.com/natlyn7/ Re: Construction Loan 6Feb 19, 2013 8:07 pm soooo..... finally ready to put a deposit down on a block of land! The block is $216000 and we will put $1000 down to hold it then another $9000 down 14 days after. We have been told 'Settlement will be 14 days from the registration'. Registration takes place in March 2014. Does this mean that after we have paid our $10k deposit that we don't pay anything until settlement in March 2014? Also, we have not been approved for finance yet, should we get pre approval before depositing? We have a good financial situation, no debt and savings, with 2 full time incomes, we are confident we would be able to borrow around $470k for house and land. Lexia Slim Twist with Beechwood Homes http://houseoflexia.blogspot.com.au/ https://www.instagram.com/natlyn7/ Re: Construction Loan 7Feb 19, 2013 9:18 pm You would need to organise finance approx 2 months prior to settlement. You can get a pre-approval now but (a) you will need to keep renewing it which means more paperwork and (b) your situation down the track may change which may mean that you may need to go with another lender. Regards Shahin Re: Construction Loan 8Feb 20, 2013 11:54 am Hi Natlyn, Issue with land that is settling a year into the future is that most lenders approvals only last about 3 months, so getting a pre-approval now won't last unless as Shahin mentioned you kept on renewing it. You also have the problem of how valid is the pre-approval. Depending on the lender, it may basically be worthless. You also need to be aware that due to the current market, when the lender values the land come nearer to settlement, it may be lower than the purchase price so you may have to put in more of your own funds depending on the LVR that is acceptable. Cheers, Tom 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 19877 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35984 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 12236 |