H&L or L&H
- Thread starter WASP
- Start date
House and Land or House then land , there is no specific answer here because it depends.
One thing to be aware of is that if do land then build house, sometimes the land value can reduce between buying the land and the the building val.
Even if the land value doesnt reduce, sometimes the end value of the house is lower than the cost to buy and build...............
While the above can also happen with A H&L package, the risk is reduced because you will know end val before you are locked in.
on the finance, the land loan and the build loan must be with the same lender
ta
rolf
One thing to be aware of is that if do land then build house, sometimes the land value can reduce between buying the land and the the building val.
Even if the land value doesnt reduce, sometimes the end value of the house is lower than the cost to buy and build...............
While the above can also happen with A H&L package, the risk is reduced because you will know end val before you are locked in.
on the finance, the land loan and the build loan must be with the same lender
ta
rolf
Stamp duty is charged on the value of the property when you purchase it. If a H&L package and the construction has started, you may pay a little more stamp duty - builders usually find a way around this but it's worth being aware of.
There is usually a difference between how the loan is set up and drawn down. If you're working through the construction process with a builder the loan is drawn down at different stages through the construction process; you only pay interest on what is drawn. If you're making a contract for the full house and land the loan is usually drawn as a lump sum when everything settles. There could be some tax implications in all this if the property is for investment purposes.
There is usually a difference between how the loan is set up and drawn down. If you're working through the construction process with a builder the loan is drawn down at different stages through the construction process; you only pay interest on what is drawn. If you're making a contract for the full house and land the loan is usually drawn as a lump sum when everything settles. There could be some tax implications in all this if the property is for investment purposes.
There are very few examples of h&l packages where both are sold by the same vendor. Its much more likely to be a case of the land guy or the builder working together to sell each others product so they can make their own sale.
From a finance and risk perspective its always better to approach the lender with both the house and land contracts together. As Rolf said there are some risks that can be avoided if you can.
From a finance and risk perspective its always better to approach the lender with both the house and land contracts together. As Rolf said there are some risks that can be avoided if you can.
Do they/should they then amalgamate these loans, or you just keep on paying separate loans (Land & Build) until you next refinance
What's the better strategy with buying the land and then building
mostly having 2 loans isnt a hassle under pro packs. some lenders charge a second monthly fee, thence amalgmation may be worthwhile. with some lendersits tick and flick, with some its awhole new app.
The lower valuation risk strategy where possible is to purchase house and land. That may not alway suit.
We get a few peops that have bought land and due to lower end vals have had to sit for a loong time to build more deposit/equity.
Obviously, the state of the market and the area one buys in has a major impact on the vals risk
ta
rolf
