Question about house and land - upfront fees

[RAAFie]

I am looking at doing a house and land deal in Queensland and have put a $1000 holding deposit down. The contracts are on their way. I live in WA. On the property information it states that land settlement will be 14 days after the registration and a 5% build deposit will be due. Do I have to find that 5% or is included as a part of the eventual bank loan?

They stated on the paperwork (property info) that we have 21 days after contract date to obtain finance approval as after this date, the contract becomes unconditional. I know they work fast in Queensland but it seems too fast.

 

[tobe]

The bank might finance the 5%, if you can borrow it from another property. They can only lend a percentage of the properties value otherwise, and wont make that available until you settle on the land and the builder is ready to start (permits insuracnes etc).

Its a fairly reasonable finance clause for the land, but I would suggest you need to get finance approval for both house and land together, and you cant do that until you have the building cotnract.

 

[RAAFie]

Thanks for the advice Tobe. I have a complication in that I have an IP in Perth and some equity from it will be used to support the loan from another lender for the new IP in Queensland. Two states and two different lenders. I am sure it will be drawn out. Just wasn't sure about that 5% because I have not bought a house and land before and the 14 days for the block deposit verses 21 days for final finance approval causes me concern.