Browse Forums Building A New House 1 Nov 19, 2011 12:04 pm Hi everyone I'm just seeking some experiences on making the financial transition from 'old' house you own (or mortgaged at least) to your new build. Am meeting mortgage broker tomorrow but just trying to get things clear in my head so we know what our lives look like for the next 6 months ! We have a little bit of cash to kick off our build, so won't need to dip into bank funds immediately, but will be relatively quickly. So, working on these numbers (not the real ones), when would we roughly need to sell our house ? 250,000 Total cost of new house 50,000 cash available 100,000 funds to become available from sale of current house 100,000 borrowed from bank First payment of 15% due at slab stage, (most of our cash will be gone after this) - second payment of 20% due at frame stage. Does your bank allow you to dip into their funds whilst selling current house ? (ie and add the 100k profit from old house somewhere along the way). Hope this isn't too confusing ! Re: paying for your new house ! Couple of questions 3Nov 19, 2011 12:50 pm Don't do a bridging loan, the interest can be nuts......... I am in the same situation and will for the construction phase having 2 loans, both will be set as interest only and I'll be leaving a years worth of payments against my current home and switching to payments on the new loan. Planning to place our current place on the market once the brickwork is complete and hopefully we get settlement around move in time, worse case our current place is empty for a few weeks. Re: paying for your new house ! Couple of questions 4Nov 19, 2011 12:56 pm Eve Dweller It's called a bridging loan. would have thought interest on a bridging loan over build period of say 9 months would be steep ? Imagine we'd be better off renting. Re: paying for your new house ! Couple of questions 5Nov 19, 2011 1:07 pm dvestate I am in the same situation and will for the construction phase having 2 loans, both will be set as interest only and I'll be leaving a years worth of payments against my current home and switching to payments on the new loan. Thanks dvestate. Sorry I am hopeless with this ! When you say leaving a year's worth of payments against current home, how do you mean ? paying for your new house ! Couple of questions 6Nov 19, 2011 1:39 pm Basically your broker will normally do a loan up against both properties. Then when the old home sells you will have to reduce the loan to a maximum value of 80% of the new home's value. Also bridging loans aren't as scary as they used to be. The main drawback is that they tend to only be for 12mths which sometimes isn't long enough. I know that with Westpac a bridging loan interest rate usually increases by 1% after the first 3mths however the manager has the discretion to waive that increase. Some things are worth waiting for. Re: paying for your new house ! Couple of questions 7Nov 19, 2011 2:56 pm Make sure you understand exactly what the bank will want, we have held onto our current home whilst building the new one, and borrowed a significant portion of the money as a construction interest only loan. What we did not read clearly enough was the bank required us to put in ALL of our planned contribution to cost before they advanced a cent. They want to have the ability to hold the entire last payment to ensure they get all their documentation - i.e. occupation certificate. It did not trash us, but it would have been easy to have been really difficult for us to find that amount of cash that quickly. Re: paying for your new house ! Couple of questions 8Nov 19, 2011 4:25 pm wildewombat Make sure you understand exactly what the bank will want, we have held onto our current home whilst building the new one, and borrowed a significant portion of the money as a construction interest only loan. What we did not read clearly enough was the bank required us to put in ALL of our planned contribution to cost before they advanced a cent. They want to have the ability to hold the entire last payment to ensure they get all their documentation - i.e. occupation certificate. It did not trash us, but it would have been easy to have been really difficult for us to find that amount of cash that quickly. Yes this is what I'm concerned about wombat. Thanks for your reply. I'm not sure I understand how it will work. If we have our 50k to hand now, use that up, then how are we able to contribute the rest of "our" funds when we haven't realized them yet by selling our house. What did you do ? Re: paying for your new house ! Couple of questions 9Nov 19, 2011 4:45 pm Just be fully up front with the lender, make sure they are aware what money will be available when, get it in writing. I did have the total amount available and that went into my workings with the banker, that's why we had the oversight on my part. It should be achievable, but make sure you get your lender to spell out what you are expected to contribute and when. Re: paying for your new house ! Couple of questions 10Nov 20, 2011 7:01 pm After meeting with the broker today, we have decided to borrow the full amount for the build of the house only and put our cash towards the pool/landscaping. And stay in our current house in the meantime. It will be a big stretch for the extra payments during construction but think we'll manage for 9-12 months until we sell our current place and can pay down the loan. Re: paying for your new house ! Couple of questions 11Nov 20, 2011 8:44 pm What I will be doing is when construction begins ensure that I have 12 months of mortgage payments in the redraw for my current home and flick the loan to interest only, so we don't have to put any money into that mortgage for at least 12 months. We will be getting a 2nd loan for the entire land and building costs and begin making mortgage payments on this loan only. This mortgage will obviously balloon above my ideal amount through construction but once we sell we input that cash and the repayments will drop. Same as you not ideal but will get everything done Hi Suku18 In NSW the statutory required insurances are: 1. HBCF ( Home Building Compensation Fund) - This is if the builder dies or goes broke. But this only covers 20%… 1 1279 Personally, considering your layout (study/work desks in bedrooms), I don't think you have any other option but to leave NW windows and make them as big as possible e.g.… 7 7866 We had this happen to us last year and got charged a variation. Try and give away as much as you can that is usable to charity otherwise if you are in Sydney I have a… 1 3297 |