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House and land

Discussion in 'Property Finance' started by Drgonzo, 30th Nov, 2015.

  1. Drgonzo

    Drgonzo Well-Known Member

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    In the process of buying house and land in Adelaide. We have signed two separate contracts subject to finance one for land and one wit the home builder.

    Was wandering if anyone has experience getting unconditional approval for both transactions BEFORE settling on the land.

    We don't want to settle the land and then be in a position where for some reason in three months we go for the house construction loan and it isn't approved. The bank tell us they want a full schedule of what needs to be paid when (importantly how much and at what stages). At the moment the contract includes a schedule that has percentages of the price only and the builder says they won't settle the amount until selectiolns and footings are designed (although allowances have been made for each).
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Grats firstly - where abouts did you buy? And who are you building through?

    And no, I haven't done it that way around. Usually do the land and construction as one loan. See a broker who can tee that up for you perhaps?

    For the last bit you mention, once you pay your deposit (2200 i think mine was) they send engineers to the site to verify how much footings would be needed, and vary the allowance accordingly.
     
  3. Drgonzo

    Drgonzo Well-Known Member

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    Playford Alive the area has come along way. We have another IP in Munno Para. We are building as a PPOR and hope to get back next year - Sydney is too crazy to buy.

    Back on topic though that's what I have asked Westpac to do - unconditional on both settle on land first and then proceed with draw downs on the build but evidently they want a full schedule of payments which Sterling won't provide until we have done selections - all of ts despite it being a "fixed price contract" although I realise footings are provisional
     
  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    Yea, Adelaide is a much better lifestyle than Sydney no doubt.

    Talk to @Corey Batt , he's a broker in Adelaide who can set it all for like he did for my recent one.
     
  5. Drgonzo

    Drgonzo Well-Known Member

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    I'm already part way though with Westpac ie I have approval in principle and have provided them most of the paperwork I don't really want to change now
     
  6. Drgonzo

    Drgonzo Well-Known Member

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    Ok so bank went unconditional on the contract value pre-selections and footings, now we are just making our final decision.

    Who has built with sterling recently? There are some shocking reviews around.
     
  7. tobe

    tobe Well-Known Member

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    I wouldn't recommend going unconditional on the land until you have a formal approval with val for both the house and land. If that means the builder has to provide a fixed price contract, or the land contract finance clause needs extending, so be it.
     
  8. Drgonzo

    Drgonzo Well-Known Member

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    Thanks we have unconditional on both the house and the land, the house is fixed except for the footings. There is a reasonable allowance 27.5k in there. It's just another house in a standard subdivision / suburb so i think/hope we will be ok with that. The only other area we can bleed money is at selections, but the wife will be under strict instructions to spend no more than what is already allowed for.

    We have done it this way because we really didn't want to waste three months to have the deal fall over on valuation - either it scratches up now or it doesn't. Do you normally wait until you have done selections to get your finance approved?
     
  9. tobe

    tobe Well-Known Member

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    Every builder is different. Most seem to have the selections or colour appointment almost at the end of preparing the contract.
    Your lucky the valuer agreed to use the allowances in the contract. Many builders have a fixed price contract instead.
     
  10. albanga

    albanga Well-Known Member

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    Sorry for thread hijacking but is there anyway to lend extra money in a build for your own works?

    Let us say you have a fixed build contract for 400k but there are things you would like to do after hand over as it makes no sense paying a builder (for example I want to do my own outdoor BBQ area, driveways and vergola over deck)

    Say I need 30k to make that happen, is there anyway to lend this? Or would you somehow need to work with your builder to have it added into the contract and then you organise and the builder on-pays (yes needs to be a very friendly builder).
     
  11. tobe

    tobe Well-Known Member

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    Give the valuer a quote for these works when you hand over the build contract for valuation.

    Note, it cant happen after handover, and the bank pays the builder once the works are completed. In practice, the valuer will assume the works will be shortly completed and sign off on the last payment, the builder pays that to you and you get the driveway done.


    This sort of thing happens all the time, volume builders are really only coordinators/logisitics and H&S people. They simply bring a whole lot of different trades and materials together under one contract. Very few of the people working onsite are directly employed by the builder, they are almost always contractors, as your contract with the driveway and vergola (?) company will be.
     
  12. EN710

    EN710 Well-Known Member

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    How to specify this in the builder contract?
     
  13. tobe

    tobe Well-Known Member

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    the builder adds a variation, including the quote you have from the driveway company. For some lenders it doesn't need to be included in the build contract, but it needs to be valued alongside the build contract.
     
    albanga and EN710 like this.
  14. albanga

    albanga Well-Known Member

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    @tobe Legend! Thank you as always.
     
  15. Drgonzo

    Drgonzo Well-Known Member

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    Yes this is correct they didn't allow for floors for example, the bank told us to get a quote on a letterhead signed and try put it to the valuer provided it adds value they increase the loan and it becomes part of the draw down.
     
  16. Sonamic

    Sonamic Well-Known Member

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  17. Drgonzo

    Drgonzo Well-Known Member

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    A bit of both probably a rental initially but we would like to move back into it eventually