Browse Forums Home Finance 1 Jun 17, 2016 11:55 am I am looking to build a house at Cliftleigh Meadows, and wife and I are setting a budget of 500k. We currently only have saved up around 40k which we set aside to build a house. We are renting a flat and pay about 300 per week. Should we just bite the bullet and pay LMI or save up some more to prevent paying LMI? We will be first home owners so we don't really have a clue which the best route is. One thing we discussed though is buy land first, then build in a year or two. Thanks! Re: Pay LMI or save up some more? 2Jun 17, 2016 6:29 pm We were in the same position early this year considering if we should save some more and avoid LMI or purchase now with 12% deposit plus all the other extras like solicitors fee etc. our budget was $620000. After talking to so many people (brokers, financial advisers, friends etc), we decided to bite the bullet and pay LMI, only because prices/inflation is due to go up and once we are ready to build end of next year, we would probably still not make the 20% minimum deposit. And also because interest rates are low at the moment. And to also get out of faster of paying someone else's mortgage. And thus we have our site cut next week! Re: Pay LMI or save up some more? 4Jun 17, 2016 7:12 pm They always say you need to way the cost of LMI against the cost of waiting to buy. Which of course it a guess at best. For me I never thought I'd be able to save 20%, so I just went ahead and bought with 5%. That was 2014, I still haven't started building.. and that delay on titles enabled me to save the 20% I needed, so I think I paid 20% on land and 10% of build in the end, so I still paid some LMI, but it was like 2k versus 11k...but in the same time the blocks of land have gone up 10-15k and build costs 5k-10k. Re: Pay LMI or save up some more? 6Jun 17, 2016 9:10 pm Best to check with a broker (try posting on the finance thread, some hang out there), because I'm not 100% sure.. might be 10% of land and 10% of build..= 20% of total loan? Or 20% of each.. Re: Pay LMI or save up some more? 7Jun 18, 2016 8:10 pm If you are financing both land + build in one go, I think the 20% deposit upfront. If you do this, best to save more. Land + build valuation often valued lower than cost and you might need to cover the difference Re: Pay LMI or save up some more? 8Jun 20, 2016 10:33 am budoy So if I pay 20% of land cost, I wouldn't pay LMI, right? When I do decide to build, do I add 20% of the build cost? Yes there would be no LMI on the land loan. Then some or none on your construction loan depending on if you save 20% of the build cost by the time you want to build. Of course if you buy land that isn't titled yet you won't pay anymore than 10% now and won't need the loan until your land is ready. Best to talk to a broker or bank brokers will also be in a position to get you a better rate than the advertised rate most times. 6 7802 I've just had a look at the website. The company are just building broker's. There are plenty of similar companies that basically draw your plans (they own them so you… 8 11667 Hi Mofflepop, I would recommend finding a building designer to prepare plans, they should design to your specified budget. The benefit is you can tender the project out… 9 21024 |