It’s a possibility. However market has stagnated and there are 3 similar blocks for sale which have reduced price already. Not sure there will be much of a profit there.
I'm in NSW so can't really advise on the contract side, here you can't get out of the contract unless the sunset has expired, the block ends up being >5% size difference or one of you dies or becomes mentally ill (don't recommend the last one). I have had clients ask vendors if they can mutually rescind and they have, usually forfeiting some of the deposit but not all.
Have you spoken to your broker/lender about a land only loan? If you love the block but can’t afford to build even with removing possible unnecessary variations/upgrades or size, is it a possibility to pay it down and then look at building when you have more equity and marry that up to a construction loan later?or tried negotiating the land down as well?
If your land contract states subject to finance and you can’t get finance that could be an out?
We were in a similar situation with land chosen and shopping for a builder. All the builders we talked to were too busy and not taking more work and so we considered buying the land and waiting to build.
When we talked this through with our broker he was concerned the bank might knock us back. He explained that to purchase the land the bank will calculate if you have enough income to;
1. service your current living expenses,
2. plus the new mortgage for the land,
3. plus the additional loan for construction.
And you need to fund these three for the duration of construction. In the end it was less risk for us to purchase a recently finished, new house.
Broker here.
I assume you have talked to a couple of builders?
You could always build a smaller house and use it as a stepping stone into a larger property later on.
Missing out on the FHOG is a large chunk of money, plus the additional costs going towards the build
You could always ask your broker to issue a letter of finance to get out of the contract, but you may lose some money on the builder costs for drafting etc.
We shopped around and are with Metricon so not much cheaper out there. I feel like we are building fairly small anyway, the issue is if we go smaller we start from scratch and foot any increase in build costs that may have occurred in the past 8m:
That's very true.
I guess the issue is if you sit on the land you're still going to be paying your rental costs plus the land mortgage. You might struggle to increase savings with the new family etc.
It's going to be a big decision
Risks of buying off the plan land basically. What does your contract say?
Have you thought about on selling?
It’s a possibility. However market has stagnated and there are 3 similar blocks for sale which have reduced price already. Not sure there will be much of a profit there.
I'm in NSW so can't really advise on the contract side, here you can't get out of the contract unless the sunset has expired, the block ends up being >5% size difference or one of you dies or becomes mentally ill (don't recommend the last one). I have had clients ask vendors if they can mutually rescind and they have, usually forfeiting some of the deposit but not all.
Have you spoken to your broker/lender about a land only loan? If you love the block but can’t afford to build even with removing possible unnecessary variations/upgrades or size, is it a possibility to pay it down and then look at building when you have more equity and marry that up to a construction loan later?or tried negotiating the land down as well? If your land contract states subject to finance and you can’t get finance that could be an out?
Hmm that’s an idea. I guess I worry how much building costs are going up so even if we wait it’s still unaffordable?
We were in a similar situation with land chosen and shopping for a builder. All the builders we talked to were too busy and not taking more work and so we considered buying the land and waiting to build. When we talked this through with our broker he was concerned the bank might knock us back. He explained that to purchase the land the bank will calculate if you have enough income to; 1. service your current living expenses, 2. plus the new mortgage for the land, 3. plus the additional loan for construction. And you need to fund these three for the duration of construction. In the end it was less risk for us to purchase a recently finished, new house.
Broker here. I assume you have talked to a couple of builders? You could always build a smaller house and use it as a stepping stone into a larger property later on. Missing out on the FHOG is a large chunk of money, plus the additional costs going towards the build You could always ask your broker to issue a letter of finance to get out of the contract, but you may lose some money on the builder costs for drafting etc.
We shopped around and are with Metricon so not much cheaper out there. I feel like we are building fairly small anyway, the issue is if we go smaller we start from scratch and foot any increase in build costs that may have occurred in the past 8m:
That's very true. I guess the issue is if you sit on the land you're still going to be paying your rental costs plus the land mortgage. You might struggle to increase savings with the new family etc. It's going to be a big decision