Risks of building on a titled land

Discussion in 'Loans & Mortgage Brokers' started by nushydude, 1st Sep, 2017.

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  1. nushydude

    nushydude Well-Known Member

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    Hi,

    I was mainly looking into the established properties as our first home, because I wasn't happy about the buying off the plan as we would be borrowing the maximum we could and I didn't want any lending policies becoming stricter causing us issues.

    But, is there such risk if the land is already titled and ready to build? Because, I believe we need to get the loan fully approved (not just a preapproval) before we can go ahead with the building, am I wrong? If that's the case, there is no risk of the lender saying they cannot lend the promos Ed amount because the contract is made.

    What are your views on this?

    Cheers
     
  2. Terry_w

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

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    Yes there is a risk. If you are borrowing to build then you could enter a contract subject to finance approval to reduce the risk.
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    However the building contract is also subject to the builder accepting the terms of your finance eg. if the financier will only pay at certain stages which don't tie into the builder's claims schedule or the schedules as required by Office of Fair Trading.
     
    Paul@PAS likes this.
  4. tobe

    tobe Well-Known Member

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    Fixed price building contracts have a Finance clause. Use it. Get the loan valued and formally approved before the clause expires and paying the 5% deposit to the builder.