Browse Forums Home Finance 1 Apr 05, 2012 6:24 pm Hi everyone, I'm a new member, and my husband and I are planning to either buy or build our first home early next year. I would absolutely LOVE to build our own house, and I've already found a perfect house that I'd love to get. *lol* Will probably be sold by the time we actually get around to it though, but I'm a little overexcited so have been looking at a lot of home and land packages online. Anyway, the main obstacle for us in terms of building is the fact that we'd be paying rent while the house is being built. My friend built a house that was just finished, and she's been giving me some rough details of how much she had to pay in repayments while the house was being built; her house is around the same price range as we're looking at, but she paid a 20% deposit and we'll only be able to do 10%. I just find it really hard to plan how much we'd be looking at paying in addition to our rent during the time the house is being built, and it really is something we need to know before starting the process! Some of our details that may be relevant: Location: Brisbane north/west side, QLD Price range: Max $300,000 Current savings: $10,000 Savings we're hoping to have by the time we go to get pre-approved for a loan: $30,000 FHOG eligible: $7,000 - provided they continue this Building boost eligible: $0 - because we'll be too late.. boo. Current income: Approx. $800 per week Current rent: $250 p/w Current bills: $80 p/w Car: $40 p/w So as you can see, we spend about $400 per week on most of our expenses, and I'm trying to figure out how we'd be able to afford paying repayments on a house that is being built for about 5-6 months at the same time. The obvious solution would be to save up the money beforehand, say $10,000, so we can use that for the repayments, and use our income on our normal expenses; however, we are pretty sure we won't be able to save up that much, and we're pretty determined to do this as soon as we're both eligible to apply for the loan (this is another story) because the house we're currently renting is being demolished next year and we really don't want to move into another rental. I'm interested in finding out roughly how much we'd be looking at paying each week/month if someone has similar experiences, and how you were able to do it at the same time as paying rent? Thanks in advance! Settlement: 10.02.13 Slab: 06.03.13 Frame: 08.03.13 Lock-up: 05.04.13 Handover: 03.06.13 Build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=59555 Brisbane Photography Paying rent while building 2Apr 05, 2012 7:11 pm Say if the build spans over 6 months, the first 3 months will be ok because not much loan has been drawn down yet. So the interest won't be that much. But it will be harder towards the end though. At the time of final walk through, you will probably be paying approx $1.5k repayment a month on top of your rent. Re: Paying rent while building 3Apr 05, 2012 7:37 pm Thanks, mr.21! So if I understand it right, you start off paying interest only on the land portion of your loan from the date when you sign the contract, and then the amount of interest you pay increase as the house is being built (interest for both land and house)? Settlement: 10.02.13 Slab: 06.03.13 Frame: 08.03.13 Lock-up: 05.04.13 Handover: 03.06.13 Build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=59555 Brisbane Photography Re: Paying rent while building 4Apr 05, 2012 8:29 pm The easiest way to work it out is go to a bank site and use their calculator to work out the interest only payments on 270000. That is then the most you will have to pay during construction if you build If i was on a pc i would have given you the figures but it would be about 1800 per month interest only Paying rent while building 5Apr 05, 2012 8:41 pm Hi I'm not entire sure how land&package works. Maybe someone else can help you out here. I can only speak from my own experience. We bought our land directly from developer and then we went on to choose the builder we like. We started paying interest on land when the land settled. Say if the land is worth $170k and you contribute $30k to the loan, you will be paying interest on $140k loan. That's about $700-$800 a month. When construction of the house begins, that's when progress payment kicks in. The first few payments (slab and frame) aren't too bad. It will probably eat up 30% of the cost of construction. It is when you reach lockup and fixing stages that you start feeling the bite. By the time you paid off both of these invoices, you would have drawn down approx 90% of your loan. Luckily by the time you get to lockup and fixing, it also means that handover is not far away. So strictly speaking, the last two months or so will be the hardest. Re: Paying rent while building 6Apr 26, 2012 4:08 pm The way my partner and I worked out if we could afford it is. Our full repayments once our loan is completely drawn (construction loan - interest only for the first 12mnths) will be around $360 per week. Once the interest only period ends this will increase to around $450 per wk. Our repayments will start at around $150 per week when our land titles and we pay the remainder we owe ($150K) and go up with each payment to our builder until the full loan has been drawn. We are currentley saving $400 per week ontop of paying around $1000 per week in bills and rent so we know that we can easily afford the mortgage payment whilst still paying rent....we just wont be able to save as much as we have been lately as we will be using the money we would usually put into our savings every week to make the mortgage payments. So how much are you able to save per week at the moment? if this amount is around the same as what your repayments will be (should be able to work out what your repayments will be on any online bank calculator) then you should be fine. If you are not able to put aside what your full repayment would be every week then you might stuggle towards the end when the loan is almost fully drawn with paying rent/bills/expenses ect....ontop of the mortgage payments and probably best to wait and save a bit more. You dont want to get evicted from your rental while building because you cant pay rent and you definatley dont want the builder to stop work because the bank wont release a progress payment due to you not paying the bank. Re: Paying rent while building 7Aug 21, 2012 3:01 pm mr.21 ... So strictly speaking, the last two months or so will be the hardest. Or the last 2 years, depending on who you are building with You will need to be pretty sure your builder can finish the house on time, or include hefty penalties for lateness (good luck getting the builder to accept this). Metricon Riva 33 - http://herlihy-riva.blogspot.com Site start 15/03/2010 - Handover 23/12/2010 9 months and 8 days (284 calendar days) from site start to handover Re: Paying rent while building 8Aug 21, 2012 6:19 pm We didn't have a lot in physical savings, but needed to utilize the redraw on our first home. Our bank would only give us 90% of the value, and that's the value they determine it to be worth. They didn't take our upgrades into account when estimating the value. So we needed probably $40,000. Remember too, if you build you will need cash for driveway, fence, landscaping, window furnishings etc. Doing it as a renter with your expenses is fine, but you'll probably need more savings. Costs always blow out. Re: Paying rent while building 9Aug 27, 2012 12:25 pm MalinViktoria Location: Brisbane north/west side, QLD Price range: Max $300,000 Current savings: $10,000 Savings we're hoping to have by the time we go to get pre-approved for a loan: $30,000 FHOG eligible: $7,000 - provided they continue this Building boost eligible: $0 - because we'll be too late.. boo. Current income: Approx. $800 per week Current rent: $250 p/w Current bills: $80 p/w Car: $40 p/w Hi MalinViktoria, I know you wrote this post months ago, but hey, the thread is still going and maybe my response will still be useful. If you want to make sure you don't run out of money, you need to make sure you will be able to pay your expenses, rent and maximum mortgage all at once. Maybe work backwards? Your fortnightly income (because I prefer to work in fortnights) is $1600. Take out rent, it's $1100. Take out bills and car, it's $860. So, let's call it $800. Monthly, you have $1600 to spare. By my calculation (on this: http://www.smartsearchfinance.com.au/mo ... lator.html) your repayment on a $270k interest-only loan (at 7%) will be $1575 a month... so you shouldn't run into trouble if you end up paying your whole mortgage (interest-only) and your rent at the same time. It might just be a bit tight! I recommend you pretend that your repayments are $1575 from the start and save the difference between your actual repayments and the $1575 every month so that you have some money to fall back on if you need it. Best to get used to money being tight.. and then when you no longer have to pay rent, it'll be a nice change! Though you'll still need to factor in your P&I repayments after the interest-only period ends. We have been saving as if we are still trying to get a deposit together, even though we got there almost a year ago - I want to have $30k in the offset by the time the house is finished so that we will have cash for appliances and furnishings, a bit of room to move if we need it Something to think about that I haven't mentioned or calculated here... LMI.. if your deposit is less than 20% you'll have to pay LMI as well. Like kitkat90, we have a set amount of money we save each fortnight so we already have a buffer as the loan draws down.. the only thing that will be affected is the amount of money it is. I went through and worked out how much the repayments at each stage will be after each progress payment and how much we'll have to adjust the savings we put aside each time - I was happy to find that we'll still be able to save a bit per month even when we get to the end Shop around carefully for a builder - some do have standard inclusions that you could be happy with. We haven't upgraded much at all in our place (truth be told we don't yet have the final variation so I can't tell you how much it is, but shouldn't be more than a couple grand) so we know we haven't blown our budget, and we have plenty of savings sitting there just in case. Save save save! 5.5m Terrace House - Lightsview (Northgate SA) Moved in!! - 22 February 2013 /viewtopic.php?f=31&t=53455 Re: Paying rent while building 10Sep 29, 2012 11:58 am Just thought I should check in on this thread; a lot has changed! Thanks kitkat and juski for your recent replies! Here is an update on our situation and plans: Location of build: Brisbane west, Fernvale, QLD Price range: $370,000 Deposit: 10% / $37,000 Loan amount $333,000 Construction grant eligible: $15,000 Mortgage insurance: Approx. $8,000 (included in total loan amount), if I've calculated correctly Current situation Current income: Approx. $900 per week Current rent, bills and car: $370 p/w Current food: $100 After handover: Repayments at 7%: $511 p/w Bills and cars (we'll get another car once we move): $170 p/w Food: $100 p/w Calculated progress payments during completion stage: $466 per week + rent $250 = $706 Leaving us approx. $190 for bills, cars and food. So we won't be comfortable by any means during the build, but we'll manage. And we'll be fine after handover; everything like driveway, landscaping and fencing is included in the loan amount, so all we have to pay for after handover is security screens and curtains. Settlement: 10.02.13 Slab: 06.03.13 Frame: 08.03.13 Lock-up: 05.04.13 Handover: 03.06.13 Build thread: https://forum.homeone.com.au/viewtopic.php?f=31&t=59555 Brisbane Photography Hello everyone Please advice me how can I install mesh security window or we cab say mesh flyscreen inside while the pvc plantation shutters are already installed? Is… 0 11593 Thanks for your reply. I will just wait and see I guess. Trying to get some more information from our builder. 9 30239 |