Buying Land

[outbackjack]

OK still sorting out vendor finance for block of land.

I have a meeting with Vendor today.

All things being equal, how hard is it to getting bank finance for a block of land? I think if i put a shed or whatever on it, doesnt add much value.

So in a about 12 mths or so, I would like to change to a convetional loan.

Is it any hard to get a loan on a block of land than house and land??

I am putting down about 8 percent deposit to start with and willl have paid off a bit more in 12 months.

Hopefully there will be some capital gains as well.

 

[Rolf Latham]

Hi OBJ

all things being equal, many lenders will do a land loan to normal LVRs - ie 95 +or - LMI depending on lender and a few things such as PPOR or IP etc

ta

rolf

 

[outbackjack]

OK thanks.

Well hopefully it will get some capital gains, plus I already will have paid deposit etc.

Plus I will have payment history as well.

Just need to get rid of my large credit card debts etc.

 

[Aaron_C]

Vacant land is the same as a house for most lenders - just as long as you can service it.

 

[tobe]

I must disagree, vacant land is more risky than a house, and is harder to get approved. Many lenders do have the same maximum LVRs, however in practice it can be a lot harder to get approved. They need to take your current rent paid for a start, and they also need to see you could service a loan for the house as well down the track. Many lenders have a clause in their docs that building needs to commence within 12 months or similar. Rarely acted on, but its there in the docs. 'vacant land' can mean diferent things. Metro? Rural? house block? services close? multiple acres? All these factors limit the number of lenders available.

Id be wary assuming you can refinance vendor finance. Your 'track record' isnt accepted by many lenders, and Mortgage insurers arent big fans either.

With an 8% deposit, you might just scrape in with a 95%plus LMI loan. Id try that first before signing up to vendor financing. At least get a lenders valuation, you might have a rude surprise.

 

[Colin Rice]

Attended a property developing seminar recently and the presenter (Damien Collins) said "ants don't pay rent"!

I reckon most lenders would have a profound understanding of this concept and risk rate accordingly.

 

[Terry_w]

OK thanks.

Well hopefully it will get some capital gains, plus I already will have paid deposit etc.

Plus I will have payment history as well.

Just need to get rid of my large credit card debts etc.

Make sure your repayments are documented clearly. It can be more difficult to refinance private vendor finance loans - especially the rent to buy variety where you are not the legal owner.