Financing House and Land

Financing home and land may be specialised but it doesn’t have to be complicated. There are some additional factors to consider however once your loan is being taken care of by a specialist there is nothing to worry about.  
 

Not just the best rate

The most appropriate home and land loan is not simply the best rate. For example, ensuring the processing of your loan is administered correctly, is just as important as your rate. Errors here can result in delays or a valuation shortfall. Such delays may cost you penalty interest or price increases from the builder and your rent and interest on the land whilst you wait.  
 
Below are some additional factors to consider when choosing your construction loan, lender and broker: 
 
  • What are the progress payment and inspection fees?
  • What cost if any is there in splitting between a land and build component?
  • Will the bank fund the things you’ll do yourself (e.g. fencing, landscaping, A/C)?
  • Does my broker have the expertise to administer the loan correctly?

How it Works

Construction finance requires funding two parts, firstly the land and then the building.
Land:
Once you have signed the land contract settlement is required in as little as 6 weeks. Upon settlement the bank will draw the funds required to purchase the land and a repayment is then required one (1) month after this date.
 
 
Build:
After the bank issues an authority the builder then commences construction to be completed in five (5) stages. At the completion of each stage the bank pays the builder a set percentage of the contract amount. Interest is calculated on the amount drawn and interest only repayments are required one monthly after the first progress payment.

 

CLICK HERE for information regarding stages of construction and a worked example of the loan repayments required.