Tip of the Day #1: Construction loans

There are 2 viable steps when financing for a construction loan.

Apply 2 loans with the same lender, 1 for the land and another for the building process.


Apply for both loans together.

It is usually better to do them together.

Settling the land first runs the risk when the build contracts ready the valuer may short value your land. It happens a fair bit especially in new estates. It's also a risk your details might change, or the banks policy, or the wider market might change between settling the land and getting the build loan.

If you are a first home owner, you will get your first home owner grant (FHOG) approved if you have a building contract executed and FHOG approved. Doing it separately means you have to pay the full amount then apply for a refund.

Stamp duty is only charged on the land value. The only time stamp duty would be higher is if the house was actually built on the land when you sign the land contract (the value of the property at contract date).