Mortgage - Pre-Approval

natbut · Sep 03, 2007 5:58 pm

I'm looking to build a house and I need a 100% loan.

I have just found out from the builder that once the contracts are ready I will need to pay a $5000 deposit within 2-3 days.

I enquired with a mortgage broker how long it takes to approve a loan and they said that it takes approximately 2 weeks. I can't get a loan without the contracts (and quotes for various items like air conditioning etc).

What I am wondering is if I get pre-approval for a loan will that mean I would be able to have the money faster? ie I would be able to give the $5000 deposit to the builder with 2-3 days of contract.

Or if I can't do that, a friend is willing to lend me the $5000 but would a mortgage reimburse that?

I will be speaking to a bank/broker about this but just thought I'd find out if anyone here knew the answer or had been in a similar situation.

TIA

wanelad · Sep 05, 2007 11:49 pm

You may be able to negotiate the deposit and ask for extra time, there is what is called a Deposit guarantee that you can purchase for a small amount. This guaranatees the seller the deposit and you do not have to come up with the full amount.

For the deposit guarantee you need to have full approval in place, so the way to go about it is to organise a pre approval and make sure all has been done just subject to the valuation.

Dont forget to make the contract subject to finance approval lender of your choice. If this is off the plan you may be taking some risk to seal the deal but I would need to know more

wanelad · Sep 05, 2007 11:50 pm

You may be able to negotiate the deposit and ask for extra time, there is what is called a Deposit guarantee that you can purchase for a small amount. This guaranatees the seller the deposit and you do not have to come up with the full amount.

For the deposit guarantee you need to have full approval in place, so the way to go about it is to organise a pre approval and make sure all has been done just subject to the valuation.

Dont forget to make the contract subject to finance approval lender of your choice. If this is off the plan you may be taking some risk to seal the deal but I would need to know more

FionaL · Nov 25, 2007 7:41 am

I'd love to know where you are getting a 100% construction loan from? We used 3 different mortgage brokers and non could find a 100% construction loan. The best we got was 95% with bankwest. 5% deposit with $3500 M insurance included into the loan. We paid stamp duty and legals. All up we would have been $16,000 max out of pocket.

Kryten · Nov 25, 2007 1:17 pm

Hi FionaL

I've organized a 100% construction loan through Mortgage Choice via IMB Bank for a house & land package. I've signed the land contract, but the Bank also needs the house contract, otherwise I would need a 5% deposit for the land portion.

At this stage I'm just waiting for the builder to complete the plans and contracts so I can send everything to the bank at once and I won't need to hit my savings as I'm hoping to use my savings for stamp duty, mortgage registration and new furniture

FionaL · Nov 25, 2007 5:02 pm

Guess it's because we live in the country :roll:

natbut · Nov 28, 2007 10:54 am

Mine was organised by Aussie through Commonwealth.

When I went direct to the Commonwealth bank they told me they didn't do that. But when I went to Aussie and said I wanted a 100% construction loan he straight away said Commonwealth.

thlo · Nov 01, 2008 3:33 am

FionaL

I'd love to know where you are getting a 100% construction loan from? We used 3 different mortgage brokers and non could find a 100% construction loan. The best we got was 95% with bankwest. 5% deposit with $3500 M insurance included into the loan. We paid stamp duty and legals. All up we would have been $16,000 max out of pocket.

Just a clarification on the difference in the experiences noted here.

If your developer is offering you pre acouncil approved plans on the land they own, you can apply to lenders as a package upon which they can accept it for 100% (or 97% and LMI capitalisation).

However, if you have to settle on the land first and wait for plans to be drawn and approved by council, lenders usually offer you 95% plus LMI as they can't be certain what you'll be doing with the land and when.