Having one Loan for Land and House

Drekko · Sep 18, 2014 1:06 pm

Hey guys

I have a holding deposit on a block. Settlement is not due for another 6 months so I just wanted to hold it for me

Have to pay the 10% next week

Spoke to broker about having one loan for both. She told me I need a building contract etc for that

Cant I have the loan for the land first, then once I choose a builder etc then increase the loan for the price of the house and have one loan?

If I have two loans do I pay more interest? Dont want that

cintamami · Sep 19, 2014 6:38 pm

Hi there

Just went through this process myself with BOQ.

Yes, that is to be the case. Why don't you start shopping for a builder now?

What I did was, I use 20% deposit on the land, and for the building, I had to re-finance it. This way, I am only losing a bit of bank fees.

If you were to use less than 20% of deposit for the land, your gonna hit LMI 2x. First when you settled for the land, 2nd when the building started.

Tim McGrath · Oct 06, 2014 11:31 pm

Hi Drekko

There is no problem "topping up" a land loan with a construction loan once you are ready to build so you only have one loan. The only exception is if your land loan is on a Fixed rate.

Having 2 loans won't cost you extra interest or additional LMI (compared to only having it as one loan) but it may cost you a fee depending on the lender/product etc... I would get the Broker to check with the lender to confirm the answer given to you.

Hope that helps.

Regards

Tim

jb_money · Dec 08, 2014 2:37 pm

Hi There,

You can do a land loan first with most lenders with a 5% deposit depending on valuation and then do another one just for the build.

In total it can work out to be 95% for land PLUS construction and loan as the valuation stacks up.

Another option is you can do the land only first and then refinance and increase the existing loan for the construction.

Hope this helps.

Regards,