House & Land Package Loans Melbourne

Not necessarily. Depending on your land developer, you could hold the land as long as you want without building. That being said, most building contracts have a 12 month clause to ensure you start the building process in an adequate time frame. We always suggest seeking a pre-approval on both land and construction loans separately so that we can manage any timing or start date issues.

If you start to adjust your original build plans or specifications during the construction process, your builder will issue you a post contract variation. You will need to pay for any variations from your own savings and cannot be included in the loan mid construction. We suggest being as thorough as possible with your initial build contract and having a savings buffer to account for any unforeseen changes.

In some instances a construction loan can be more expensive than a normal home loan. Depending on the lender, there will be interest rate loading or Interest Only repayments that can attract a higher cost during the build process. Be mindful that there can also be fees associated with the payments to the builder which is an important consideration when deciding on the right home and land package loan.

Within most build contracts there will be a progress payment schedule which outlines the stages in which the builder would like to receive payments. These payments will coincide with milestones of the build. For example; deposit, slab, frame, fixing, lockup and completion are all common stages for standard home build. A lender will review these and use your approved home loan to pay the builder in accordance with the signing building contract.

Most lenders that have good construction loans allow for Interest Only during the building phase. This enables you to only pay when each stage of your build is paid for. Once the property is completed, your loan will convert to the standard Principal & Interest loan.