House and land packages, what and when?

[Casserole Dish]

I've done searches but can't find what I'm after. My question is, with a house and land package do you pay 10% up front? If so, surely it would only be 10% of the land cost and then I gather you pay in installments as the house is built?

So you would get pre-approval from the bank for the finished amount and then get valuations through the build? Or just one at the end? And in the process of it being built, say, it drops in value, what then?

Anyone been through the process and would care to share?

(Apologies if this would be better in the finance section.)

 

[rugrat]

Depends on the company / builders you are going through. Sometimes you pay a deposit of 5% or 10% of entire price up front and then the rest on completion and settlement (that's how I like to do it). Sometimes you actually pay for the land seperately from the house, so will take out a mortgage for the land straight away and then do a draw down loan for the building when they are going to start. And I am sure there are other ways to do it too.

You really need to ask the people you are going through how they do it, and then if they are willing to compromise on this if it is not what you want.

 

[Casserole Dish]

Thanks ruggy! Thanks for your info.
You're right, I should ask more questions of the people selling these deals. That means more phone time to be scheduled between 9.00am and 10.00am weekdays (that's Raggs and then Playschool on the electronic babysitter) .

Our problem is (like many others I'm sure) no stash of cash/equity. So I'm really just window shopping at the moment. I thought it might be a sneaky way to IP2 with a teeny deposit and the rest due after June 30 (when we might have some more to play with).

Do you know how the banks work it? Maybe I should post in finance.

 

[kero]

we paid a 5% deposit for a house and land package in Melb. So, the upside is once its completed, we should have ridden the recent wave up. very similar to purchase off the plans. But what's the down side?