Browse Forums Home Finance 1 Oct 21, 2014 7:52 pm Hi All, Need some help to understand how this will work re: finance situation. I have purchased a new home and land package from a builder. I have sort out a mortgage broker and selected a home loan product for the total package price - and it is a construction loan. Now, I have a fairly large deposit and the builder is asking me to setup a joint account with them and by the sounds of it I am meant to settle and pay for the land firstly before the builder then starts building and the progress payments are then due for each of the stages as I understand it? I would of thought I give up all my deposit to my bank, then they (the bank) provide the funds to the builder for the land & the build of the house as it progresses but I think my builder is treating the land and house as separate contracts, and my land is due to settle soon and they (the builder) are asking if my large cash deposit will go toward the land. Can anyone provide some insight, do I give all my cash to the builder, then bank provides the rest and we buy the land first. Then I have no money left and bank will step in and pay my progress payments for me as the house gets built? Please help me understand, thanks. Re: New home & land purchase - loan situation - questions! 2Nov 10, 2014 7:05 pm HI, Maybe you've already had this sorted? Generally, if you're borrowing, say, 70% of the land and 70% of the build you will put your deposit in to the land and cover the costs (stamp duty (if there is any), legal fees etc) at land settlement, then you continue to pay for the build up until you've put your contribution in then the bank takes over. I find its easier to send the first invoice to the bank (even though you know you're going to pay it) and that gets the bank systems active on your loan. The bank will tell you how much you have to put in first then they'll take over. They always work on holding back enough to finish the build contract with their loan. Your broker would be more than happy to help you with this! If you do put more into the land it just means the bank will have more left over to put towards the build progress payments, as you suggested, so no big deal and maybe even save some interest along the way! Have you started the build yet? Any pics?! Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: New home & land purchase - loan situation - questions! 3Nov 14, 2014 4:00 pm Hi, I would recommend you discuss the requirements of the deposit with your solicitor. It is uncommon to establish a joint account with the builder. There would be some details on the builders policy in the building contract. Re: New home & land purchase - loan situation - questions! 4Nov 15, 2014 8:33 am Hi there, sorry for late reply I thought topic was dead as no reply for a long time. Yes all sorted. Long story short I put all deposits forward for the purchase of the land, and then bank is financing everything going forward (building progress payments etc). 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 19097 You might be able to apply to divert the sewer at your expense. In NSW you would contact a Water services co-ordinator and they would give you advice as to whether or not… 1 16146 Hi Suku18 In NSW the statutory required insurances are: 1. HBCF ( Home Building Compensation Fund) - This is if the builder dies or goes broke. But this only covers 20%… 1 2710 |