The real estate market in Australia has changed a lot. The properties are no longer confined to off-the-plan apartments or existing properties. The construction of new properties or house and land package became an option for home buyers. Today we will give an overview of house and land package.
For clients who need loans to buy a house and land package, the land application can be submitted together with the building loan application if the contract exchange date of the house is close to the land contract exchange date. On the other hand, two loan applications can be submitted separately if gap between contracts exchange dates is more than 12 months. Please note that in both cases, land and house applications must be submitted to the same bank. Also the builder must be a “licensed builder” so that the bank could smoothly approve the loans. Meanwhile, Signed building contracts, Council approved plans, construction insurance and public insurance must also be submitted to the bank for loan approval.
The construction loans are based on the progressive draw down of actual construction. In the meantime, you only need to pay interest according to the amount the bank has already approved. For example, assuming that your construction loan amount is $250,000. The second phase of the construction has been completed and the bank has already drawn down $62,500 loan. At this time, you only need to pay monthly interest based on that $62,500. Afterward, you are free to choose the repayment method (interest-only repayment or P&I repayment when the bank draws down all the loan amount.
Usually, construction is completed in five stages. Before construction, the bank will make a preliminary assessment of the building on land conditions, construction plot and floor plans (as if complete).
1st stage: Foundations stage. The budget is 20% of the total cost, usually the deposit paid by the client;
2nd stage: Frame-building, about 20% of the total cost;
3rd stage: Construction of external lining, about 30% of the total cost;
4th stage: Construction of internal lining, about 20% of the total cost;
5th stage: Practical Completion, with a budget of at least 10% of the total cost. Before the final stage, the bank will perform a second valuation of the house. Also, Certificate of Occupation and building insurance are required before completion.
We simplify the loan process for you, the following materials are all you need to provide:
1) Payment receipt from the builder: only for the first phase of the loan
2) Progress payment request form: Some banks require clients to sign the loan document at the same time.
3) Invoices for construction loans
Are you worried about the construction loan being so complicated and time-consuming? A complete construction loan will inevitably involve multi-party cooperation in different fields. We communicate with banks and builders on your behalf to ensure that you pay each time. We will participate in every stage and ensure that each stage could proceed smoothly. Our VIP team is your lifelong trusted advisor and will always be on your side to provide a relaxing loan experience!