Time limits on construction loans?

If you were buying land with the intention to build an IP, would there be a time limit on when building would need to commence?

 

For my PPOR it was 12 months. Should be ample.

It took me 3 months to find and select a builder, although this included a delay whilst I was overseas for 3 weeks.

Design, contract and council approval took another 5 months. After council approval I waited 1 month for the build to start.

 

You can buy vacant land with no intention to build but if you get a construction loan approved you'll need plans done anda building contract signed - once this is done you've usually got a year or two to get the house built.

 

Is it possible to go to 90% LVR on just a land loan & then down the track convert or refinance to a construction loan?

 

We were given the option to split our loan into two. We decided not to, we didnt want to commit on the land without being confident that the constuction valuation came in for the 90% LVR we were targeting.

 

Our Loan was approved in November last year. Land settled in January. DA approved around the end of April, house started in May and handover is tomorrow.

 

Also, is it more difficult to get finance for a vacant blovk if you don't intend to build on it for 18 months to two years?

 

Many land developers will have a build time frame in their guidelines for new estates.

Many lenders also have time frames in the loan documents, that the vacant land loan needs to be converted to a construction loan within 12 months.

Neither will usually act if you don't abide.

It is a good idea to get a build contract valued at least before committing to vacant land. There are lots of risks just buying vacant land.

 

Yes - you definitely can. Depending on the land/build details, you will need to be careful to know the total package isn't overcapitalising as you could otherwise be stuck with a block of land you cannot build on however.