I need someone to help me crunch some numbers...

[helle]

DH and I are looking at purchasing 3-5 acres of land, and then building. Providing everything goes well our land should be ready to go in 18 months (it's still being subdivided) and we have the possibility of being able to put a deposit on it in the mean time to hold it for us. It's our dream. This will probably be our last "housing" venture and the place we end up staying for the next 20+ years.

I know in the long run it will be worth it but obviously things at the start will be tight. Do-able, but tight. We are dead set keen tho!

We are hopefully looking at keeping our loan under the 400k mark. Which is also totally do-able with the $ this house owes us (we hope)

What I need to know is, the fee's.... I understand there is a fee for selling our current house. Do we pay GST on the sale of our house as well?
And then what fee's are involved with the purchase of property (obviously good ol' stamp duty..) and then building the actual house (it won't be a land and house package). But what else?

We've made a sort of "budget" to try and work out how much money we need to put where, but we aren't really 100% sure on where it all needs to go!

If there are any ex realty gurus out there, I'd love for you to give me the low down

[Sopdet]

I only know a bit about the building part, things like getting the plans drawn & approved by council, other council approvals etc. If the block is being subdivided, are they putting in the essentials for you (water, electricity, gas, phone lines) or do you have to pay for them to be attached to your block?

Are you going to do it as owner builders? If so who needs to get the license from the building authority? Is there any study you need to do to get this?

Good luck with it all!!!!!!

[Frangipani]

Maybe have a look at your banks website...there might/should be calculators to help work it out. Or maybe ask your lender ???

[helle]

I'm pretty sure elect etc is being put through before they're sold... I think that's part of the reason they are taking so long (I hope anyway... didn't even think of that part!)

And we were hoping to owner build, maybe. DH is pretty handy as is my Dad (Dad build his own house) just to cut out that middle man. In saying that my uncle is a builder and has told me on numerous occasions he'll "look after us" but obviously he has a life, family and a job and I'd rather fork out the extra cash than be waiting for him to have some free time itms.

But thanks! I shall jot all those points down Didn't even think of council stuff.

[Kosi]

A convayencer will be helpful for some of the charges associated with things too.... Like I believe there is a discount on stamp duty or another charge for "primary residence", so if you are selling the place you have and are purchasing a new primary place of residence, you get about $1000 discount.

[Teeki]

They generally say to allow 5% of the purchase price as costs. In your situation, because you're buying the land and then building after, the costs will only be calculated on the price of the land. I just jumped on to my bank's site (where I work), and did a rough estimate. If you're buying land at say $200k, and you're going to borrow 80% of that (so $160k) these would be the costs:

Government Charges :
- Stamp duty on land transfer: $5,890.00
- Registration of land transfer: $165.00
- Registration of mortgage documents: $135.00
- Search of certificate of title: $28.50

Other Charges:
- Estimated conveyancing cost: $500.00
- Loan Approval Fee: $600.00

Total estimated charges $7,318.50

Summary:
- Purchase price $200,000.00
- Loan amount $160,000.00
- Deposit Amount $40,000.00
- Total estimated charges $7,318.50

So the total you'd need with the deposit and fees is $47,318.50

If you were to borrow more than 80% you'd also have Lender's Mortgage Insurance - a percentage, depending on how much the land is worth and how much you borrow.

Also, with the finance if you do Owner/Builder it can be a lot tougher, and they may put restrictions on how much you can borrow. You'd need to provide a lot of info. If your uncle is a registered builder, it may be easier if he can write you up a contract as if he's building it for you that way, we've had a couple of customers do this.

Generally what you'd do with your loan, is take out a loan for the full amount - the land plus the cost of building the house (taken from the building contract). Then when the land settles, the loan is drawn to that amount, and you pay interest only on that amount. As the house is built, you make progress claims to draw further funds to cover costs as you go, until the house is finished and the loan is fully drawn - then you start your principle & interest payments.

Hope that helps a little, sorry if it's stuff you already knew!

[Arimeh]

A convayencer will be helpful for some of the charges associated with things too.... Like I believe there is a discount on stamp duty or another charge for "primary residence", so if you are selling the place you have and are purchasing a new primary place of residence, you get about $1000 discount.

Some states offer this - I know queensland has a PPR stamp duty rate and an investor rate.

Land is calculated on the investor rate - which is higher - because there is no house on it yet, regardless of whether or not there is a house going to be built on it.

Thats how it works in Queensland anyway.

In tassie everyone is charged a high rate - no matter if its land, PPR or investment purposes.

[Teeki]

Some states offer this - I know queensland has a PPR stamp duty rate and an investor rate.

Land is calculated on the investor rate - which is higher - because there is no house on it yet, regardless of whether or not there is a house going to be built on it.

Thats how it works in Queensland anyway.

In tassie everyone is charged a high rate - no matter if its land, PPR or investment purposes.

Yeah I'm not sure about this either, but when I went onto the calculator I put in WA and primary residence, so I guess it worked out any discounts for that state if there are any

[Arimeh]

But it wouldn't be a primary residence if there is no house on it yet - ITMS?

[Phteven]

In NSW there is no stamp duty on land that costs less than 400k. No idea about WA.

[Teeki]

Yeah, good point... I have no idea what happens in that situation, how they determine if it's a primary residence yet. I cam't say it's just land in the calculator for some reason

[helle]

They generally say to allow 5% of the purchase price as costs. In your situation, because you're buying the land and then building after, the costs will only be calculated on the price of the land. I just jumped on to my bank's site (where I work), and did a rough estimate. If you're buying land at say $200k, and you're going to borrow 80% of that (so $160k) these would be the costs:

Government Charges :
- Stamp duty on land transfer: $5,890.00
- Registration of land transfer: $165.00
- Registration of mortgage documents: $135.00
- Search of certificate of title: $28.50

Other Charges:
- Estimated conveyancing cost: $500.00
- Loan Approval Fee: $600.00

Total estimated charges $7,318.50

Summary:
- Purchase price $200,000.00
- Loan amount $160,000.00
- Deposit Amount $40,000.00
- Total estimated charges $7,318.50

So the total you'd need with the deposit and fees is $47,318.50

If you were to borrow more than 80% you'd also have Lender's Mortgage Insurance - a percentage, depending on how much the land is worth and how much you borrow.

Also, with the finance if you do Owner/Builder it can be a lot tougher, and they may put restrictions on how much you can borrow. You'd need to provide a lot of info. If your uncle is a registered builder, it may be easier if he can write you up a contract as if he's building it for you that way, we've had a couple of customers do this.

Generally what you'd do with your loan, is take out a loan for the full amount - the land plus the cost of building the house (taken from the building contract). Then when the land settles, the loan is drawn to that amount, and you pay interest only on that amount. As the house is built, you make progress claims to draw further funds to cover costs as you go, until the house is finished and the loan is fully drawn - then you start your principle & interest payments.

Hope that helps a little, sorry if it's stuff you already knew!

Wow thanks for that! That is considerably less than I was imagining...

My uncle is licensed so there's no issue there.

[Teeki]

No worries, glad it helped It'll be a little different if your purchase price is different, but I guess it's a good indicator. And like Mel said, if they don't count a block as a primary residence, a conveyancer should be able to help with that

[Sammiejane]

You only have to pay GST if you are registered for GST and the land etc is bought as a business venture if that makes sense


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[helle]

No worries, glad it helped It'll be a little different if your purchase price is different, but I guess it's a good indicator. And like Mel said, if they don't count a block as a primary residence, a conveyancer should be able to help with that

We are hoping the land will be around the 250k mark. Will know for sure this weekend hopefully.

I'll def find our about the residence thing!