How much deposit do I need for a block of land?

Discussion in 'Property Finance' started by jennyn, 17th Jul, 2003.

  1. jennyn

    jennyn Member

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    I'm thinking about buying a block of land. How much deposit would I need to get a mortgage? 20% deposit?
     
  2. Brenda Irwin

    Brenda Irwin Property addict

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    Jennyn, Here's my version. 20% would be excellent. You can obtain mortgage insurance on vacant land if needed. For example say you only have 10% then mortgage insurance will provide cover to cover the Bank's increased risk. Just remember vacant land is generally a burden unless the price is going to sky rocket or can be diveded etc. Holding costs are high with land so best to build or do removal home so you rent or live in asap. Then you are benefitting but is up to you. Contract stamp duty on land is the same as for investment properties. Holding costs with land are the forgone interest on your own funds and cost of borrowed funds and rates etc none of which can be tax deducted. Also remember if you plan to build to make sure the Bank will give you the building loan as well as I have seen where people have purchased the land but not been able to borrow to build on. This is a not good so best to check with your bank person first. There is also solicitor rates adjustment title office fees and bank fees etc. Sorry if you know most of this but hope this helps you.
    Les (Brenda's better half).
     
  3. chrislaw

    chrislaw Member

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    Hi Jenny,

    I did this 6 mths ago thru ANZ, conditions were 80 % LVR, 5.97 % rate - called "ANZ Money Saver Land Loan". I used Rolf and glad I did as the application was 22 pages long and he advised just the bits needed. Don't know if same rates today, you will have to ck.
    I agree with Brenda re holding vacant land and moved a house onto mine then refinanced loan to combine all my costs.

    Chris
     
  4. ocean view

    ocean view Member

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    Land & loans

    Hi Jenny

    Before I would give any reasons, I would want to know where the land is ,, R you expecting high cp, does land supply out strip existing home purchases, is the land in great shortage?
    Also have you purchased it OTP?

    I mainly invest in land alone. In some cases I have only needed to hand over 5% ... While at settlement borrowed 120% to reinburse the 5% + interest payments.

    We Australians love building new homes, for that latest trends, such as a media room!! ect.... & if the land is not in great supply one tends to pay a high price to build..,,,to have these new ideas

    It can be such a great investment. If conditions are right!
    I have many with no homes on them. If cg is high why build? Hold it until the % tells you to.

    In regards to loans,,, 10% IS very common with LMI to be capitilised on top.. So 10% down & stampduty along with solicitors
    costs get you there. Like many others ANZ is a good start to look.

    Just another point of view

    Ocean
     
  5. jennyn

    jennyn Member

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    Thanks for all your replies.

    I would use Rolf to get finance and I would be able to put down a 20% deposit. Then I would subdivide as I've already spoken informally with the town planner about it.