Difference between Land acquisition loan & Construction loan in One Minute Feaso
Hi Amber,
With step 4 on the one minute feasibility the number of months for the land acquisition finance holding period before construction is entered and then there is the duration entered for the construction period. Does the duration of the construction period then calculate and add the loan for the land over the construction period as well or should the entire loan period for the land be entered into the land acquisition section?
1 Like
Financing Query
-
Land acquisition loan and construction loans are two separate loans.
-
Total interest calculated on both loans will be added to the project as total finance costs.
-
Typically, you would use a land acquisition loan to acquire the land/site. It accounts for the holding costs (interest on land acquisition) incurred during the time when you are getting ready for construction.
-
You may choose not to have any land acquisition loan. This is usually true when you have purchased a site with plans & permits (development approval) that is ready for construction.
-
In which case, you would go straight for the construction loan.
-
If you will use just one loan, please use a construction loan.
-
Total finance costs = Loan loan interest costs + cons. Loan interest costs.
-
In this case, they will be…
-
Total finance costs = $0 + cons. Loan interest costs.
Here is a video explanation:
