Browse Forums Home Finance 1 Feb 06, 2011 12:16 pm Hello everyone, Ive seen a broker for a building loan. I like ING Mortgage Simplifier currently at 7.12% p.a. however ive been advised to go on the Construction Loan currently at 7.83% p.a. untill the building has been completed then move over to Morgage Simplifier. I know customers can get a rate of 7.12% on a loan as low as $50 000, so why cant I for example get a loan at $200 000 for land and increase it when required for the building costs at this rate rather than at 7.83%? Thankyou Re: ING Constuction/Mortgage Simplifier loan 2Feb 06, 2011 11:48 pm I have never done construction, and would assume your broker is really the best one to answer your questions. But my understanding is that the Construction Loan would be set up so that the amount of the loan increments over time, hence although the rate is more, for the first period of time the loan amount is less (reducing the interest payment in dollar terms). But I would think that the final loan amount would be approved from the start (check with your broker to make sure). "We make up to 5 progressive payments directly to your builder. As you are not drawing down on the full amount of the loan immediately, interest payments are minimised." Reference With the Mortgage Simplifier however, if you wish to increase your loan amount, you need to go through a loan variation application for an increase, which includes all your paperwork regarding income, etc again and a valuation to ensure they are happy to loan you the increased amount. So basically you may not be guaranteed that extra finance later on. "Whether you are applying for an increase to your existing ING DIRECT home loan, or would prefer a new facility that is separate to your existing home loan, you will need to complete a Residential Loan Variation form and have it signed by all borrowers and guarantors, if applicable." Reference And I have no idea if they actually allow the Mortgage Simplifier for incomplete projects, your broker would hopefully be able to answer this, if not, you could ring ING DIRECT to check. (If they don't allow the Mortgage Simplifier for incomplete projects, which wouldn't be that surprising, this could well be why your broker has advised you to go with the Construction Loan initially.) Please note, none of this post should be taken as financial advice! Re: ING Constuction/Mortgage Simplifier loan 4Feb 07, 2011 12:47 pm ING do not allow construction loans under their mortgage simplifier. There are plenty of other lenders with similar products to the mortgage simplifier that also allow construction. So unless there are other reasons that you are using ING then I wouldn't go with them. They aren't interested in construction loans which is why theirs is so expensive. I believe their construction loan reverts to the mortgage simplifier once construction is complete. You would have to check if this is true for your proposed loan structure. Re: ING Constuction/Mortgage Simplifier loan 5Feb 09, 2011 12:33 pm Thank you for all your advice, I will have a chat to my broker about looking at a loan with another bank. Does anyone have any recommendations with a bank for a building loan with not such a high rate? Re: ING Constuction/Mortgage Simplifier loan 6Feb 09, 2011 8:07 pm Hi, I normally dont suggest ING for construction ( because of the rate) There are plenty that offer lower rates for construction - Westpac (7.16% - after construction still the same tho), BMC ( 7.04% - revert to 6.95%) , NAB basic home loan( 7.17%)... Acutlly ALL the banks offer constuciton loan! and most offer it at the "basic home loan" rate Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 20102 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 36613 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 12383 |