Bank deposit Advice

With a construction loan, do I need to show the bank 10% of the total amount of house and land upfront, or just the land upfront and then can I have the rest in instalments as it is required ? I hope this makes sense

Also, does anybody know if a deposit that I have put on land and house can count towards this bank deposit or not. Just trying to figure out what I can afford and by when

Thank you

 

A deposit already paid should be included in your total bank deposit required, and the bank may get nervous if you don't have the deposit for the construction loan as well if your serviceability is tight. They don't want to get stuck with a block of land not earning income if things go pear shaped.

 

And assume they are liars...

 

Are you applying for the land and construction finance at the same time?

If so - you'll need to show your contribution up front. I.e. if you're borrowing 90% from the bank then you need to show them you have the other 10% plus costs (stamp duty, etc) when applying for the loan.

Cheers

Jamie

 

Just like any other purchase the lender needs to verify your deposit.

I suggest doing the land and build together, there are lots of risks buying land before knowing what the build and finance looks like, and for most lenders it's harder getting a land only loan.