Browse Forums Home Finance 1 Mar 09, 2014 1:23 am We currently have a loan for our land, if we were to pay out our land loan before going for the contraction loan would our land then be used as equity and we would not need to pay a large deposit for LMI reasons?? Thanks! Our build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=70984 Re: Land loan & construction loan question 2Mar 09, 2014 11:29 am The short answer is Yes. If the land has increased in value since you purchased it then this can be taken as equity too. Re: Land loan & construction loan question 3Mar 09, 2014 11:58 pm Yes, if you have equity in land then it can be used towards your construction loan. In fact if you have enough equity, you might not need a deposit for construction. However note that there are normally upfront costs associated with the builder to do soil tests, drawings, plans, etc that come out of your pocket. Cheers Tom Re: Land loan & construction loan question 4Mar 10, 2014 2:13 pm Hi Tom - Thanks yes $3000 deposit for the builder of which $1500 is used to do survey/soil tests etc. We just wanted to make sure if we put all of our money into our land loan that we wont then need that money as a deposit on our construction loan to avoid LMI/get the loan. Our build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=70984 Re: Land loan & construction loan question 5Mar 11, 2014 10:53 pm archetto Hi Tom - Thanks yes $3000 deposit for the builder of which $1500 is used to do survey/soil tests etc. We just wanted to make sure if we put all of our money into our land loan that we wont then need that money as a deposit on our construction loan to avoid LMI/get the loan. Yep, as long as you have the equity in the land, it can be used as a deposit for construction. Just be aware that lenders value the complete build in this case as land value + construction, so to avoid LMI your total borrowings need to be 80% of that. Cheers Tom Re: Land loan & construction loan question 6Mar 12, 2014 12:25 pm Our land sale price was $148,000 and we estimate our construction loan to be about $350,000. Does that sound like we could still borrow with just the land as security?? I'd say our land will have gone up by the time we build also as the ones going up for sale around it are $50,000+ more, and smaller in size. Our build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=70984 Re: Land loan & construction loan question 7Mar 12, 2014 2:24 pm I think you should be well inside the 80% threshold to borrow the full construction amount. Say value of house and land combined is $500k, you should be able to get a loan for $400k without LMI http://camdenbuild.blogspot.com.au/ by invite only please pm me Re: Land loan & construction loan question 8Mar 12, 2014 4:04 pm Oh awesome, thanks for that! That makes me feel better about putting every last dollar into this current loan then!...then onto the next lot of debt! Ah adulthood.. Our build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=70984 Re: Land loan & construction loan question 9Mar 12, 2014 10:33 pm archetto Our land sale price was $148,000 and we estimate our construction loan to be about $350,000. Does that sound like we could still borrow with just the land as security?? I'd say our land will have gone up by the time we build also as the ones going up for sale around it are $50,000+ more, and smaller in size. When was the land purchased and what is the outstanding loan on it? Cheers Tom Re: Land loan & construction loan question 10Mar 13, 2014 11:41 am Our land settled 21st Feb 2014 and we have $83K left on the loan Our build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=70984 Re: Land loan & construction loan question 11Mar 13, 2014 11:52 pm archetto Our land settled 21st Feb 2014 and we have $83K left on the loan As it only settled last month, you might find that the purchase price will be what the valuation will come back at for the land. If that's the case and construction is $350,000 then the total valuation will be $498,000. Your total loan will be $433,000. You can still use the equity in the land however the LVR in this case will be 87% so LMI will be applicable. Cheers Tom Re: Land loan & construction loan question 12Mar 14, 2014 1:46 pm Ok thanks, how come the loan will be $433K? We will have paid off all of the land before we go for construction so the loan will only be $350K? Thanks - first time mortgage so still learning! Our build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=70984 Re: Land loan & construction loan question 13Mar 14, 2014 11:38 pm archetto Ok thanks, how come the loan will be $433K? We will have paid off all of the land before we go for construction so the loan will only be $350K? Thanks - first time mortgage so still learning! Oh, I thought you were still going to have the $83K outstanding on the land. In that case you are right, total loan will be $350K and LVR will be approx. 70%. No LMI needed. Cheers Tom Re: Land loan & construction loan question 14Mar 16, 2014 1:48 pm Great thanks! Our build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=70984 Re: Land loan & construction loan question 15Mar 23, 2014 6:09 pm archetto Ok thanks, how come the loan will be $433K? We will have paid off all of the land before we go for construction so the loan will only be $350K? Thanks - first time mortgage so still learning! Yes no LMI payable as LVR is under 80%... But why would you want to pay out the land loan and rely on the equity??? Cash is always better than equity..as equity value can go up and DOWN but cash doesn't + cash can be used for soft cost and other cost that's needed for the build. I would personally apply for the build loan at 80% LVR ( ie so no LMI) use the equity in the land + some of your cash....any extra cash you have can be sitting your land offset account ( if you have one...if you don't have an offset account apply for one for your construction loan) Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: Land loan & construction loan question 16Mar 27, 2014 12:46 pm Because our construction loan is going to be quite high so we want to just have the one loan rather than combine 2 and be paying off more, we will still have cash to offset on the loan, but will only have 1 loan i'd rather use the equity to borrow and have the cash sitting there for emergencys and finishing our house off. Our build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=70984 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 19640 DIY, Home Maintenance & Repair That laser level looks lovely! We bought one for less than a quarter of that price off eBay. It worked really well for us and it's still going now, five years later. After… 1 16957 Hi, My home construction is complete, and the handover is scheduled next week. However the construction has been delayed and I have raised this to the builder. The… 0 5398 |