First Loan Questions

Discussion in 'Loans & Mortgage Brokers' started by jaepee36, 18th Sep, 2017.

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  1. jaepee36

    jaepee36 Active Member

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    So finally in the process of getting our first loan on a land and build.

    One of the conditions for the land loan is to have 'general insurance' and that 'xxx' be an interested party. I have no idea what this is and when I punch it into google, it doesn't come up with too much other than it is an insurance other than life insurance. I note that it is a vacant block and we are yet to receive a construction loan so am unsure what we would be looking to insure..

    Anyone with experience on this particular aspect of the loan process?

    Sorry for the silly question.
     
  2. Terry_w

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

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    You will need to insure the building and to note the mortgagee on the policy.
     
  3. jaepee36

    jaepee36 Active Member

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    Thanks for the prompt reply Terry.

    I intend to do that, the things I am unsure about is:

    a) I have not signed building contracts due to disagreement in processes between said bank and the builder providing only 'quotations' and I do not anticipate that being sorted before land settlement in a fortnight.
    b) i would have thought the builder would have all the construction insurances up until hand over in which at that point I would insure the building, unless you mean I would also need to employ vacant land insurance until this point?
     
  4. Terry_w

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

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    The bank won't need insurance for the vacant land but they will require you to insure the building.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    With a construction loan, the general insurance is required when the building is completed. Prior to that, there's nothing to insure.

    The builder will obtain building insurance once the contract is signed.

    For information specific to your loan and circumstances, your broker or banker is the best person to ask for clarification.
     
  6. tobe

    tobe Well-Known Member

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    It's the banks usual conditions about insurance. Not applicable for vacant land.
     
  7. jaepee36

    jaepee36 Active Member

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    Ahh ok, its making sense.

    I've asked the banker and he wasn't too sure as the first loan documents I received again, were for the land only component.

    Sounds like this and a few other clauses are a copy and paste - the formatting in the document is quite interesting in parts too.

    Thanks for the help all!
     
  8. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    You cant insure land and the builders indemnity insurance will cover you until handover which at this point you will need to insure the building and any contents (although not required by bank) is recommended as well.