Browse Forums Home Finance Re: Broker's advice - no construction loan! 2Apr 16, 2016 8:31 pm Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Broker's advice - no construction loan! 4Apr 19, 2016 2:28 am Maybe the broker is scared that your borrowing capacity may be lower in the next few months due to variable income? Things such as you relying on commissions, allowances, bonuses for servicing? I'm just hypothesising as Bec said your full situation is not known. However like buying off the plan, its a similar risk. What works today may not work in the future, all you can do is work out if you can afford the loan at this moment in time and make the decision from that with the caveat that you understand the risks. As for rules being changed, a lot has happened in the last year since the APRA targeted investment lending. Lenders have tightened up policies effecting things like income, existing living expenses, etc which has flowed onto owner occupied lending. Its an ongoing transition. Cheers Tom Re: Broker's advice - no construction loan! 5Apr 19, 2016 7:03 am You don't have to get a house and land package from a builder to get the loan approved in one go. You can create your own. You just have to be fairly progressed around knowing what you want. Find a block you like - put a refundable deposit on it (1k) choose a builder and get them to quote you a fixed price contract (get them to include some fat in the way of "upgrade packs" for $x for upgrades that you'll go through at a later stage), pay a nominal deposit (1.5k). Go back to the broker and apply for the lot in one go. Both land and build contracts should be subject to finance, no exceptions. Also consumer lending is always evolving. Banks are getting tighter because they've been told to. There are a number of reasons for that. However, Banks have been letting their bellies out a little bit too much since the post GFC reforms and there are concerns in some segments of the market that the current growth of debt tied to mortgages held by banks is unsustainable given that was one of the triggers/factors in the last GFC. theres a whole topic on reserving and why it happens here, but thats for another time. Re: Broker's advice - no construction loan! 6Apr 19, 2016 12:43 pm Is this the 1st time you've built? Builds have a habit of blowing out so if $500k is close to your upper limit what would you do if you bought the land and then realised that you need $600k for everything? I think that's what the broker is trying to say, that the budget for a build is variable, but the budget for an established house is not. Re: Broker's advice - no construction loan! 7Apr 19, 2016 12:54 pm Matt1 Is this the 1st time you've built? Builds have a habit of blowing out so if $500k is close to your upper limit what would you do if you bought the land and then realised that you need $600k for everything? I think that's what the broker is trying to say, that the budget for a build is variable, but the budget for an established house is not. That would be assuming that the Op is looking at the base price of a home only without consideration for upgrades. there simply isn't enough provided by the OP to go on, but sounds like the broker isn't earning their worth by helping their client get to the desired outcome. Creator of superduperonium, expert at expert things, nobel laureate, can hold my breath for 10 minutes. Re: Broker's advice - no construction loan! 8Apr 19, 2016 1:33 pm I was thinking more along the lines of site cost blowouts. Things like piering, slab upgrades, exposure grade bricks, splits etc can really add up quickly. Re: Broker's advice - no construction loan! 9Apr 19, 2016 1:57 pm Matt1 I was thinking more along the lines of site cost blowouts. Things like piering, slab upgrades, exposure grade bricks, splits etc can really add up quickly. That's what a fixed price contract is for. Eg -Not all builders slap you with provisions for rock removal on top of a fixed price contract. The other items you mentioned would be identified pre contract through engineering etc Re: Broker's advice - no construction loan! 10May 02, 2016 11:56 pm Thank you for all the replies - ponzu, what you posted is really helpful, I didn't even realise that I could find land and then 'create my own' house and land package - that's fabulous news! Matt, yes first time building but I do realise that costs are extra when building. We originally accounted for $50 000 extra for site costs, upgrades etc ...but the more I read on this site I see that $100 000 is more realistic! Re: Broker's advice - no construction loan! 11May 03, 2016 9:02 am Just on This - you can seek a full approval for the land & a pre approval for the build up to $x. The full approval allows you to exchange on the land as you won't find many land contracts subject to finance. And definitely you can "create your own" package on most land - occasionally the builder takes an option & only allows you to build with them but more often it's your project entirely. Hope all is progressing well. Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Broker's advice - no construction loan! 12May 03, 2016 9:45 pm becjarrettdalton The full approval allows you to exchange on the land as you won't find many land contracts subject to finance. Odd this, every estate sales office I visited advised I could do subject to finance. Always pays to ask though Re: Broker's advice - no construction loan! 13May 03, 2016 9:48 pm Ponzu becjarrettdalton The full approval allows you to exchange on the land as you won't find many land contracts subject to finance. Odd this, every estate sales office I visited advised I could do subject to finance. Always pays to ask though For what term? What state? Apologies I should clarify, I'm referring to a longer term clause - rather than a few days, and particularly NSW. Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Broker's advice - no construction loan! 14May 03, 2016 11:09 pm becjarrettdalton Ponzu becjarrettdalton The full approval allows you to exchange on the land as you won't find many land contracts subject to finance. Odd this, every estate sales office I visited advised I could do subject to finance. Always pays to ask though For what term? What state? Apologies I should clarify, I'm referring to a longer term clause - rather than a few days, and particularly NSW. Victoria, all estates gave a month to sort out a contract with the builder and get to the bank for review as a whole. Quotes for deposit on the land ranged between 1k and 5% 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 20092 Broker here - legislation says that every true broker must put the clients best interests before theirs so in theory they must offer you the best options for you on their… 2 46506 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 36598 |