Mar 26, 2020 8:04 pm
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...
Re: Land loan and construction loan2
Mar 26, 2020 8:08 pm
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.
Re: Land loan and construction loan3
Mar 26, 2020 8:22 pm
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
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
Re: Land loan and construction loan4
Mar 26, 2020 8:27 pm
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
Re: Land loan and construction loan5
Mar 26, 2020 8:35 pm
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.
Re: Land loan and construction loan6
Mar 26, 2020 8:44 pm
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
Re: Land loan and construction loan7
Mar 26, 2020 8:52 pm
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.
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