Browse Forums Home Finance Re: Land loan and construction loan 2Mar 26, 2020 7:08 pm Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Land loan and construction loan 3Mar 26, 2020 7:22 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 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 Re: Land loan and construction loan 4Mar 26, 2020 7:27 pm 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 Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Land loan and construction loan 5Mar 26, 2020 7:35 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 loan 6Mar 26, 2020 7:44 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 Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Land loan and construction loan 7Mar 26, 2020 7:52 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. Re: Land loan and construction loan 8Jan 12, 2021 5:13 pm becjarrettdalton 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. 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! Re: Land loan and construction loan 9Jan 13, 2021 11:33 am Jojac becjarrettdalton 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. 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 Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Land loan and construction loan 10Jan 13, 2021 12:42 pm becjarrettdalton Jojac becjarrettdalton 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. 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 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 18896 Thanks very much! And would the landscaper/contractor generally involve the engineer or is that something the client would do? Thanks for your help 2 10004 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35191 |