We are at a critical point with our finances again. As we approach the settlement date on the land, we need to get a big chunk of money to pay for the land. We also need the assurance from the lender that we will be able to finance the build.
In the words of our solicitor, pre-approval means nothing in legal terms. If the bank says you are pre-approved for $1,000,000, it doesn't mean that they will lend you the whole $1M. They will need to make sure that what you are borrowing for (in this case, the house and land that we are buying) will be worth $1M when it is finished.
Here in Australia, most banks will often undervalue the property. This is to reduce the risk on their side. I'm guessing this is a result of the highly regulated banking industry, especially if you are borrowing from one of the big four.
We're hoping that we get somewhere close so that the availability of funds is not restricted for the building process. We have some reserves on the side but we are hoping not to dip into these yet. These will be for things after the build (e.g., landscaping, curtains/blinds, additional furniture, utility account connections, etc.).
The last news was that there was going to be an inspection on site to see if the land is worth what it is on paper. I can already say that it probably is not worth that on paper. Although, as the land price was locked in a few months before (already 'purchased' by the builder), if you compare the price with other pieces of land in the same estate, this one will now be lower priced. The newer land releases have increased in price since the previous releases.
The very important thing for us to happen, is to have the valuation done and the bank assurance received before we commit to the purchase. Given the timelines, we have two more business days before this has to happen. Minus one for sending the document. It'll also go over one weekend so let's hope the process goes smoothly.
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