Building before settlement.

Discussion in 'Loans & Mortgage Brokers' started by klabat, 3rd Jun, 2016.

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  1. klabat

    klabat Well-Known Member

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    Thought I'll ask...

    If anyone has done this, a long settlement on a vacant lot of land of 12months.

    Design and Build property in 6-9months before settlement. Save on interest and ready to move in once settlement comes or settle earlier when build is finished. If not finished, still settle as proceeded.

    Contracts in place with caveats allowing to build on land before settlement

    Do lenders loan out for this type of strategy?
     
    Last edited: 3rd Jun, 2016
    klabat, 3rd Jun, 2016
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    No lender would lend without the ability to mortgage the land. If you are not legal owner you cannot mortgage.

    If could be possible if you use other security. But you need to get some good legal advice.
     
    Terry_w, 3rd Jun, 2016
    #2
    Phantom likes this.
  3. tobe

    tobe Well-Known Member

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    Mortgage only happens at settlement. If you want to build before then, go right ahead, with cash or as terry said a loan against another property.

    The builder would find it problematic too, as if you don't make a stage payment they haven't got any recourse.
     
    tobe, 3rd Jun, 2016
    #3
  4. LifesGood

    LifesGood Well-Known Member

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    Done it recently but with cash, mortgage would be a difficult one!
     
    LifesGood, 3rd Jun, 2016
    #4