Can You Combine a Land Loan and Construction Loan?
The Australian housing market provides several opportunities to homebuyers and investors. You can purchase an existing home, or you can buy land and build on it. If you plan to finance the land acquisition and the home’s construction, you’re looking at applying to two different loans. In addition, it’s possible to combine a land loan and construction loan.
From the lender’s perspective, this project provides more risk than a residential home purchase. However, non-bank lenders, such as Mortgage House, have pioneered forward-thinking funding solutions. Even though a land and construction loan carries more risk, solutions exist.
Construction loans contain schedules, requirements, and parameters. Lenders release construction payments directly to your construction crew. It’s possible to combine land and construction loans because the land builds equity. If the project falters, the land equity covers potential losses.
Lenders release the funds for the land purchase in the same manner as a home purchase. For the construction purchase, it’s important to submit permit information, construction plans, and material costs promptly. The information helps the lender determine the funding amount.
In most cases, lenders fund 80% of the land and appraised home value. If you apply with a guarantor, it’s possible to receive 100% of the total project’s value.
Land Loan and Construction Loan Conclusion
If you want to combine a land loan and construction loan, it’s an option. Our Mortgage House loan specialists discuss funding options based on your current financial situation. We also consider other factors. To start the process, contact us today.