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by matilda
Sat Apr 24, 2010 7:59 pm
Forum: Home Loan Forum
Topic: Rural construction loan
Replies: 2
Views: 8039

Rural construction loan

After ringing around several banks today, it seems we will probably find it difficult to gain approval for a construction loan in a small town. We are currently renting in the city, and plan to relocate the family to a rural town. There seems to be a number of stumbling blocks, including:
1. Not enough equity/deposit: We have purchased a 1/4 acre block of land in a tourist/agricultural town (pop: 400) and own 20%, which is only about 5% of the total value of land plus construction contract. Lenders are telling us they need 20% (or some say 30%).
2. Employment: While I have a healthy income, with ten years employed with the same national employer, there seems to be some doubt over relocating too far from where I work. I have extended leave on full pay coming up to support the relocation, and plan to either find other work or commute.
3. Build: the builder requires a 5% deposit on signing of the contract, but many lenders are telling us we will need to come up with this cash ourselves, as they will only advance funds on pouring of the slab.

Do we have any options, or is our scenario just too hard for lenders?