I have paid 10% advance for a land in Clyde which will be titled in July 2023. The contract price is 400k. I have selected a building costing 500k. But I don’t have 20% advance (to avoid LMI). I understood that the land have an equity of app. 40k. Will this 40k be considered as advance while applying for a loan? Any good suggestions for a bank / broker who gives cash back? Is it good to arrange 1 loan for land & construction? Or 2 seperate loans for land and building, please advise.
Home Loan for a Land + Construction
chandrats on 28/03/2023 - 06:55
Last edited 29/03/2023 - 07:00
Last edited 29/03/2023 - 07:00
Comments
There is a two ways to go about it, do your own research or mortgage broker, since OP looking for advice, a mortgage broker is the way to go. Usually, construction loan comes as separate loans, but in the end, they become one at that stage, and OP can refinance.
Ask the professionals.
Isn't that what OP is doing here?
Thanks gerry
The land may have appreciated 40k, but because there’s a loan on it the bank will usually value it less.
The land may have appreciated
It hasn't, there is lots of 'land' in this area up for sale.
During our build, we were with CBA, and they required two separate loans. One for construction and one for the land. Keep in mind some banks don't offer construction loans (ING for example didn't at the time)
The construction loan would be interest-only repayments until your build is finished.
Search for a broker. They will input everything in their system to give you an answer. The bank will start of with construction (interest only) and change to a home loan once complete.
You'll need more information to see if you're even able to get a loan. Income, employment status & expenses etc.
Firstly, I assume the land is titling July-2023 and 2022 is a typo. The 40K equity you are thinking is not equity you can use twice. The best thing to do is talk to banker/broker. I know how it works but can’t explain by writing an essay here. Considering you won’t be able to move banks because of LMI. You can look for a broker offering cashback on ozbargain.
High level you need 20% of each land and construction price to avoid LMI.
So you have equity of $80k ($40k deposit + $40k appreciation) and want to borrow a total of ~$850k. You're a long way from 20%.
I love a good masochist.
Land purchase $400k with $40k deposit is 90% Loan to Value Ratio (LVR)…will need LMI so this loan will be for $360k + LMI
Construction $500k means estimated value of $900k. If you don't have additional funds to contribute you will have a loan for $860k against a property worth $900k = 95.56% LVR
You will need to put approx $180k plus costs (fees and stamp duty if applicable) towards the land/construction to avoid LMI.Just to clarify, do you have a loan for the remainder of the purchase price of the land in place yet? Or are you wanting a separate loan for the house and/or consolidate the land loan into this new loan?
have you signed any building contracts for 500k? as you will need to pay 5-10% when you sign your contract.
or are you still at the inital sales stage? keep in mind you need to budget fo upgrades from the base price.Best to ask the professionals of Oz Bargain first before getting proper advice.
land in Clyde
The worst area at the moment. Crazy development and poor road infrastructure.
Whenever I drive down Berwick Cranbourne Rd I feel like punching myself in the face 🥶
the road works on the closures of the 2 roundbabouts of Grices road and thompson are insane.
Insane is right!!
100%. I've been down there a bit recently and its a nightmare. Doesn't help Ballarto Road has been closed as well. I think it is open now, but has been closed.
Close to a million bucks for a house in Clyde 🫠
Definitely speak to a mortgage broker - you don't want to be left short!
the dumbest thing you could do right now is attempt this, just search all the posts here from builders putting the costs up.
what you budget for today will increase tomorrow. so builders want more and interest goes up, what then?Dear All, Thanks for the information and advise.
hi OP,
did you building costings a sales quote or a contract price?
I have received a quote only
A mortgage broker is your best bet. Ask the professionals.