Hi. Newbie here. I have signed a land contract this month with finance due 21 days and 14day settlement after. Finance is due next week. I have been told by my broker bank has approved the land loan and received the approval letter but not the loan document yet.
My concern is I wanted to get a construction loan together with land loan. I am in the process of talking to builder and getting draft plans but no build contract yet so I feel like I won’t make it on time for the finance or settlement clause for the land? It means I have to settle the land first then apply for construction loan, is that the only option I have?
What do bank need to for construction loan if combining with land loan as one? Do they need just the contract or do they need the plans already approved by council?
The main aim of this is to get as if complete valuation rather than at the end of the build.
Can someone shed some light I am confused...
if I settle on the land first then say a month after apply for construction loan and combine both loan together, will the bank do after completion valuation? It won’t be as if complete valuation?
With my above scenario (land finance due next week etc) what other options can I ask my broker and conveyancer?
Am I still allowed to request extension on finance or only on settlement now?
Thanks a lot in advance...
Land loan and construction loan
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Hi Annie,
Firstly - to your extension, what state are you in?
What you’ve done sounds very normal. You can’t get the build loan approved without plans and a build contract (with only a couple of exceptions where they’ll use tender depending on state).
Typically I do:
Land loan fully approved
Preapproval for build
As if complete valuation for build
Build loan fully approved - this May or may not absorb the land loan.
The land will settle anywhere in that list.
Firstly - to your extension, what state are you in?
What you’ve done sounds very normal. You can’t get the build loan approved without plans and a build contract (with only a couple of exceptions where they’ll use tender depending on state).
Typically I do:
Land loan fully approved
Preapproval for build
As if complete valuation for build
Build loan fully approved - this May or may not absorb the land loan.
The land will settle anywhere in that list.
Hi Bec. Thanks so much for your reply. Im in Qld. So based on what you mentioned, I can get my broker to apply a pre approval for build loan and bank can do as if complete valuation for my build. I really thought I had to have build loan approved prior to land settlement to have as if complete valuation... it’s my first time so have limited knowledge on the process..
Does it mean, as long as I have pre approval for build loan, I can settle on the land first then let’s say my build plans and contract is only finalised after land settlement so bank can only give me final approval of build loan after land has settled, bank will still do as if complete valuation for build?
Land loan approved
Pre approval for build
Land settlement
Build contract and plans submit to the bank
Bank will do as if complete valuation
Bank approve build loan
Combine build and land loan
Is above possible?
May I know what you mean with may or may not absorb the land loan with the build loan?
What does bank need for pre approval for build loan?
Thanks alot Bec
Regards,
Annie88
Does it mean, as long as I have pre approval for build loan, I can settle on the land first then let’s say my build plans and contract is only finalised after land settlement so bank can only give me final approval of build loan after land has settled, bank will still do as if complete valuation for build?
Land loan approved
Pre approval for build
Land settlement
Build contract and plans submit to the bank
Bank will do as if complete valuation
Bank approve build loan
Combine build and land loan
Is above possible?
May I know what you mean with may or may not absorb the land loan with the build loan?
What does bank need for pre approval for build loan?
Thanks alot Bec
Regards,
Annie88
Hi Annie,
Yes you can do that exact sequence. Definitely they will do as if complete valuation at any time the build contract is ready.
For the preapproval they need the rough amount you want to borrow for the build - better still if you have a tender or quote.
And by absorb I mean combine the two loans
Yes you can do that exact sequence. Definitely they will do as if complete valuation at any time the build contract is ready.
For the preapproval they need the rough amount you want to borrow for the build - better still if you have a tender or quote.
And by absorb I mean combine the two loans
Hi Bec. Thanks a lot! That clarifies a lot of things for me. I will talk to my broker tomorrow to get a pre-approval for the build. Hopefully it all works out in that sequence. Thanks a lot again. Happy to have found this forum.
You’re very welcome, it’s likely they’ve already got that underway - most brokers won’t want you to buy the land without knowing you can afford to build on it
I initially had pre approval prior to signing the land contract. It was a general one, as when I applied for pre approval I was undecided with either to buy existing or build. But now I have decided to build, I have to get my broker apply for pre approval for the build this time. I didn’t know it before not until you mentioned it. Thank you.
Hi Annie,
Firstly - to your extension, what state are you in?
What you’ve done sounds very normal. You can’t get the build loan approved without plans and a build contract (with only a couple of exceptions where they’ll use tender depending on state).
Typically I do:
Land loan fully approved
Preapproval for build
As if complete valuation for build
Build loan fully approved - this May or may not absorb the land loan.
The land will settle anywhere in that list.
Firstly - to your extension, what state are you in?
What you’ve done sounds very normal. You can’t get the build loan approved without plans and a build contract (with only a couple of exceptions where they’ll use tender depending on state).
Typically I do:
Land loan fully approved
Preapproval for build
As if complete valuation for build
Build loan fully approved - this May or may not absorb the land loan.
The land will settle anywhere in that list.
Hi,
Was just looking to see if anyone has already asked, and this thread maybe the closest.
Is there any advantages / disadvantages to doing separate loan (settle land first then construction loan) compare to combine loan together at once? We’re still waiting for our land to register and we’re pretty confident we can have our build plans and contracts in place even before the land settles.
Our deposit is less than 20% so we’ll be paying LMI.. i’ve read somewhere about double dipping of LMI when doing separate loans because it will be technically refinancing the land loan to combine to the 2 loans together. Though our broker mentioned about land valuation coming in over and thus could also be an advantage to doing separate loans.
Can anyone shed light?
Thank you!
Hi Annie,
Firstly - to your extension, what state are you in?
What you’ve done sounds very normal. You can’t get the build loan approved without plans and a build contract (with only a couple of exceptions where they’ll use tender depending on state).
Typically I do:
Land loan fully approved
Preapproval for build
As if complete valuation for build
Build loan fully approved - this May or may not absorb the land loan.
The land will settle anywhere in that list.
Firstly - to your extension, what state are you in?
What you’ve done sounds very normal. You can’t get the build loan approved without plans and a build contract (with only a couple of exceptions where they’ll use tender depending on state).
Typically I do:
Land loan fully approved
Preapproval for build
As if complete valuation for build
Build loan fully approved - this May or may not absorb the land loan.
The land will settle anywhere in that list.
Hi,
Was just looking to see if anyone has already asked, and this thread maybe the closest.
Is there any advantages / disadvantages to doing separate loan (settle land first then construction loan) compare to combine loan together at once? We’re still waiting for our land to register and we’re pretty confident we can have our build plans and contracts in place even before the land settles.
Our deposit is less than 20% so we’ll be paying LMI.. i’ve read somewhere about double dipping of LMI when doing separate loans because it will be technically refinancing the land loan to combine to the 2 loans together. Though our broker mentioned about land valuation coming in over and thus could also be an advantage to doing separate loans.
Can anyone shed light?
Thank you!
I'll pick up this and reply - the only way it double dips on LMI is if you change lender, otherwise the premium you pay for the build portion (in two separate loans example) is a "top up" based on the loan amount and eventual % you borrow.
There are realistically no advantages, except where timing helps you or there are special offers; eg:
1. aim to borrow 80% of the land (if possible) and cross your fingers the valuation goes up by the time you're ready to build
2. or, currently there are some special offers for no LMI to 85% on the land (only) - and these may expire depending on your registration time frame) but potentially take advantage of one of these then pay LMI on the build only.
Ask friends and family to refer you to a great broker local to you who can make sense of this overall for you
Hi Annie,
Firstly - to your extension, what state are you in?
What you’ve done sounds very normal. You can’t get the build loan approved without plans and a build contract (with only a couple of exceptions where they’ll use tender depending on state).
Typically I do:
Land loan fully approved
Preapproval for build
As if complete valuation for build
Build loan fully approved - this May or may not absorb the land loan.
The land will settle anywhere in that list.
Firstly - to your extension, what state are you in?
What you’ve done sounds very normal. You can’t get the build loan approved without plans and a build contract (with only a couple of exceptions where they’ll use tender depending on state).
Typically I do:
Land loan fully approved
Preapproval for build
As if complete valuation for build
Build loan fully approved - this May or may not absorb the land loan.
The land will settle anywhere in that list.
Hi,
Was just looking to see if anyone has already asked, and this thread maybe the closest.
Is there any advantages / disadvantages to doing separate loan (settle land first then construction loan) compare to combine loan together at once? We’re still waiting for our land to register and we’re pretty confident we can have our build plans and contracts in place even before the land settles.
Our deposit is less than 20% so we’ll be paying LMI.. i’ve read somewhere about double dipping of LMI when doing separate loans because it will be technically refinancing the land loan to combine to the 2 loans together. Though our broker mentioned about land valuation coming in over and thus could also be an advantage to doing separate loans.
Can anyone shed light?
Thank you!
I'll pick up this and reply - the only way it double dips on LMI is if you change lender, otherwise the premium you pay for the build portion (in two separate loans example) is a "top up" based on the loan amount and eventual % you borrow.
There are realistically no advantages, except where timing helps you or there are special offers; eg:
1. aim to borrow 80% of the land (if possible) and cross your fingers the valuation goes up by the time you're ready to build
2. or, currently there are some special offers for no LMI to 85% on the land (only) - and these may expire depending on your registration time frame) but potentially take advantage of one of these then pay LMI on the build only.
Ask friends and family to refer you to a great broker local to you who can make sense of this overall for you
Thanks so much for your response! This makes sense to me now
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