When it comes to purchasing land, regardless if it is for an immediate build, an investment or simply a dream of a future place to live, there are a variety of mortgages that can be used to finance the transaction.
If you are looking to commence building in the immediate future, a construction loan could be the best choice for you.
When applying for a construction loan, most lenders require that the building process must commence within a set period of time, normally ranging from one to three years, based on which lending institution you select and whether the property is intended to be owner-occupied or an investment.
This type of mortgage provides the ability to draw down segments of the loan amount in stages, such as for the land purchase or the stages of construction, which saves you from having to pay interest on the entire loan amount until you need it.
If you are not ready to begin construction right away, and you would like to get a loan for the land without any time limitations, a vacant land loan may be the best solution for you.
Although there are general mortgage options that can be used to purchase vacant land, there are also lenders that offer specialised loans for this purpose.
The majority of loans offer terms of up to 30 years and finance up to 90 percent of the land’s value, and some lenders are willing to provide loans of up to 97 percent LVR.
For any Loan to Value Ratio of higher than 80 or 85 percent, depending on the lender, it is likely that Lenders’ Mortgage Insurance would still need to be paid.
If you have found the perfect spot for your dream home, holiday getaway, or retirement retreat, but don’t yet have the funds to build it, the next step is to talk to a specialist and discuss the different loan options that can finance the purchase.
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