Under Valuation for PPOR

You really just need to ask them to make it a standard 2 part land and construction deal with 2 contracts. This removes all your OTP risk. It will also save you several K in stamp duty.

There simply no need to do it as a single contract with full stamps and valuation risk on completion. None.

 

2 contracts doesn’t remove the valuation risk. The valuer can’t value until the site works are completed which is usually a couple of weeks prior to plan registration and settlement. It’s unusual to get a finance clause to correspond.

I’m not up to speed with stamp duty in Qld lately, it’s not waived for Fhb’s?

Isn’t there a building grant along with or instead of the Fhog in Qld?

 

Yup stamp duty rebate and a FHOG of 20k...
Bank is willing to give a conditional approval subject to valuation for the entire amount and cannot guarantee the same amount when the final physical valuation comes in...Is requesting the developer a finance clause until after property completion for OTP stuff normal?

Do all OTPs take final valuation risk?

 

What Im saying is that you should insist on a 2 part contract, because this way the settlement of the land cant occur until registration. Any valuation done then will provide for unconditional finance approval.

Conditional approvals arent worth the paper they are written on much of the time. Until you have unconditional finance, you dont have a deal

The builder/developer is passing all risk to you under the arrangement as you have outlined it

 

True.As I said I can request a finance clause post completion of property but I doubt that is highly unlikely to be accepted.

 

I still can’t see why 2 contracts is any better these days.

They used to be better because valuers could value and banks could formally approve prior to titles, and within finance clauses.

One contract means the builder is capitalising the progress payment interest, their holding costs, into the price, so it was a litttle more transparent getting two contracts and paying interest on the build as it progresses yourself.

 

Pardon my ignorance for silly questions

1. Isn't "the OTP or H&L package the same thing
2. Can non SMSF buyer also do 1 contract?The builder insisted separate contract for land and the house and 1 for non smsf.
3. which is common practice and if you can highlight process a bit more in detail would be great.

thanks in advance

 

House and Land suggests to me you buy the land and build the house, hence the 'and'.

OTP, that's what you get.
Well, what you get may be different to what you signed up for in the beginning, but that is also a risk in regards to OTP.

You would be well advised to search the forum and read all the woes PCers have had with OTP over the years.