Nov 06, 2017 6:30 pm
So, it seems all these questions come up after the bank is closed and I come to this forum to see if anyone in the know would have some type of understanding.
We are building a new house and it will be finished next week. Currently we are doing interest only payments. We will be switching to interest and principal payments - but we were wondering when this will be. Our broker has simply replied with 'when construction finishes' however as part of our home construction we have a few separate things to do after handover which were included in the loan.
1. The house - that is almost complete.
2. Swimming pool - will be installed in December.
3. Fencing - will be installed after the pool.
4. Turfing - will be installed after all that.
All of these are included in the loan. Will the interest and principal payments start straight after the house build or will it be after all the other parts have been completed?
Thanks in advance - and yes we will be calling the bank tomorrow.
Re: Interest Only Payments end after construction?2
Nov 06, 2017 8:49 pm
the answer is in normally reverts whenever the bank stops controlling release of the money - because they deem it complete. They may control all of those items you've mentioned (if you've given them the quotes and they are included in the build / valuation) or they may give you the balance of the money once the house is complete.
But sometimes they miss it and it goes for the full year.
You can request it change over at any time from the "completion" of the bank controlling release of the funds, does that make sense?
Re: Interest Only Payments end after construction?3
Nov 06, 2017 9:02 pm
Thanks so much.
It does kind of make sense - it seems a bit confusing though.
All of those quotes I listed above were included in the loan...I was just expecting to tell the bank when we needed to pay for each of them and then transfer the money each time - but are you saying it may be that they transfer the remaining balance of our loan (around $40k) and we start paying principal and interest???
Re: Interest Only Payments end after construction?4
Nov 06, 2017 9:06 pm
It could work either way. They would be more than happy to send the funds for you.
Re: Interest Only Payments end after construction?5
Nov 07, 2017 11:32 pm
We called the bank today and they said they will send another valuer out after all the work we have put quotes in for is done. After that the loan will change to principal and interest but even then they give us a month warning before that starts. Have to be happy with that!
Re: Interest Only Payments end after construction?6
Nov 08, 2017 4:00 am
You know you're allowed to pay extra, and any extra you pay comes off principal...if that helps. If you're wanting to start sooner
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