Buy land & build later or get construction loan now?

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jayem
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Joined: Tue Aug 31, 2010 11:17 am

Buy land & build later or get construction loan now?

Post by jayem »

My husband and i are both have a fulltime job and earning 50k each year. We already signed a contract for the land (187k) and paid a deposit of 14k, we just need to wait for the land to be titled in august 2011. the land is in beveridge, victoria and we both working in epping victoria. as i have credit issue in the past, i think it will be good if only my husband will apply for a homeloan. we are saving for a deposit of atleast 40k and his parents will give us 30k as a gift to help us in buying our first home. we are looking for a loan of 350k to 400k, do you think the bank will approve us? or is it ok to get a land loan first then build later?

thanks in advance!
jayem

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Otto Dargan
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Re: Buy land & build later or get construction loan now?

Post by Otto Dargan »

Firstly was the contract to buy the land in both names? If so then you may want to talk to your conveyancer about putting it in your husband's name only & if this can be done (I am unsure of VIC rules on this).

Secondly how bad was your credit history? It looks like you may be able to borrow 80% of the total cost of the project. If this is the case & your credit history isn't too bad then you may be able to be on the loan as well. This will increase your borrowing capacity as then we can use both incomes in the lenders assessment.

Based on what you have told me it is difficult to give an answer as to if it can be approved, we really need to know your full situation to be able to work that out. If your husband is on a great income then I think it will be no problem just in his name. You could go for the land loan and construction loan right away at settlement.

If your husband's income isn't that high then you may just get the land loan now or try to do the land and construction loan in both of your names. It is quite common for people to just buy the land now and to build later on when they are in a position to do so.

Just a thought, you may want to move your savings to be in your husband's name only. Savings in joint names will not be considered as genuine savings if you are not both applying for the loan. However if the savings are just in his name and you both apply for the loan then that is considered to be genuine savings. It is only if a non-borrower is a joint account holder for the savings account that it is a problem.
Otto Dargan
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