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Contract Cooled Off

The contract on the land cooled off today. We're committed to the whole venture now. The contact was subject to finance but we only need to borrow about $70,000 so there shouldn't be a problem with this.

Finance is likely to be a little complicated and the arrangement I've decided on is not the most tax effective, but is much more likely to be approved by the banks. Basically we're going to refinance our existing house to access some of the equity in that, and go to another bank for a combination land/building loan. The reason for this is that our existing lender charges a higher rate for building loans. The likely loan structure is:

Existing Lender: Refinance existing house for an extra $65,000.
New Lender: Take out land loan for balance of land cost (likely to be around $76,000). Get pre-approval for the construction loan from the same lender. We cannot get final approval for the building loan until we've signed a building contract.

To handle the work for the loan I've chosen to use the same person that handled the loan when we moved into this house, and also helped with the loan on our last house. I've got an established relationship with him and I can count on him to allow for my little foibles!


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