Browse Forums Building A New House 1 Feb 06, 2012 6:17 pm I am just about to settle on my house which means I'll be renting while my new house is being built. I haven't spoken to banks yet other than to find out what my budget is .. How does finance work when building? Will I have to have money for a full mortgage as well as rent or do you begin paying the mortgage once the house is built? Advice on this would be much appreciated! Thanks Building in Bacchus Re: Question about finances 2Feb 06, 2012 6:42 pm Your building loan should be interest only until it's fully drawn and then it goes to full repayments. You only pay the interest on what's been drawn so it will increase as you pay instalments. Re: Question about finances 4Feb 06, 2012 7:54 pm Is it a house and land package or are you getting a builder to build on land you have bought yourself? If it is a house and land package a lot of builders do not require progress payments and you make your single (large) payment to settle the contract just before handover. If it is not a house and land package then the loan will be drawn on progressively as each stage is completed. You should bear in mind that even though the repayments for your partially drawn loan are interest-only - the interest portion of your loan repayment takes up at least 75-80% of your actual repayment amount at the start of a loan (ie. when you enter the specified repayment period of 20, 25 or 30 years after the house is completed), so as you draw more on the loan you can expect those interest-only payments to go up. eg. when we had only drawn on the land portion of our loan (~$135k) out interest-only payment for the couple months up until construction actually started was around the $700-800 mark per month - we've drawn a lot more on the loan since then as we progress through the stages and I'm anticipating an interest-only repayment of ~$1,500 on the amount we have currently drawn on the loan (~$270,000) this coming month... You will need to budget for a few tight months towards the end of your construction if you are not in a house+land package contract where progress payments are not required, as you will be paying a solid chunk of your normal repayment amount when your loan is close to being fully drawn. Another point that first timers' might be surprised by is that (some?) lenders require the buyer to pay their outstanding deposit amount(s) in full before they will release funds from the loan - this applies to both the land (obviously because it's not officially "yours" until you have paid your 5% deposit) as well as the construction, which caught us out a little because our broker had gone AWOL and we had no idea why the bank was holding things up on our first progress payment. Hope this helps. Some people apparently have nothing better to do than comment on other people's sigs. You can really use anything you want the main consideration would be how it looks once painted/finished - or the look you want. Cabinetmakers use MDF because its cheap… 2 9968 I would say both styles you have pictured are steel. The lower chord of the first pic would be a massive lump if made using timber considering the size of the rafters. If… 1 6157 1 13128 |