Advise on buy now build later

Any general questions you might have in regards to loans and finance.
Post Reply
Posts: 1
Joined: Mon Jul 15, 2019 10:28 am

Advise on buy now build later

Post by Mozzie »

Hi all,

My partner and I (both first home buyers in mid 20's) are looking at buying a block of land but not building straight away as we are locked into a 12month lease. We currently have 20% of $500,000 put away for our deposit. Do we use all our full deposit on the block, pay it off over 12months then use the equity (if that's what it's called) to then borrow from the banks again. Or do we pay the 20% of the land, then refinance when we are ready to build?
What I'm asking is what's the best way for buying a block of land now but not building another 8-10months with the 20% we have.
Thank you

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia

Re: Advise on buy now build later

Post by Otto Dargan »

Hi Mozzie,

If you’re buying land and you have no intention to build within 12 months of settlement, it may be a better option to hold onto your savings since they are much easier to access than equity. Lenders also generally want to see proof of build too, they want to see the capacity that clients can build. So, if your unsure of the build timeline, just put in 20% of the land for now, then refinance when you’re ready to build.

Typically, when purchasing land, you need to meet the following requirements to ensure you’ll be able to access the equity at a later stage:
  • Location: It’s important to choose a location that is either in a major city or town or at least close to one.
  • Services: The land must be connected to the electricity grid and have access to town water or tank water as well as sewerage services.
  • Size: The land must be no larger than 50 hectares – only a few lenders will consider land sizes larger than this.
  • Access: There needs to be easy access to the land via a road. As long as it’s well maintained, dirt roads are usually ok.
You can find more information on using land equity to build here.

We’ll have to do a full assessment, but basically, with the right lender, you can do it either way.

Speak with one of our specialist mortgage brokers by giving us a call on 1300 889 743 or fill in ourfree assessment formto find the best solution for your needs.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Post Reply