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How to get the best home loan when building new

Getting the best building loan – A checklist.

Getting a loan to buy a home is not the same as getting a loan to build a home. Here’s a checklist that makes sure you’ve got what you need when it comes to choosing the best home loan for your personal circumstances.

What can I do if I don’t have enough deposit and the bank won’t lend me the money.

Most lenders offer guarantor loan products for first home buyers, although they go by different names, depending on the financial institution. Terms you might hear that refer to these types of arrangements include:Family PledgeFamily SupportFamily EquityFast TrackFamily Guarantee

Should I use lenders mortgage insurance?

As a rule, lenders mortgage insurance is required when you don’t have enough deposit, typically less than twenty per cent. Along with your deposit, most lenders will also expect to see proof of consistent savings for a period of at least six months. If you are required to pay LMI, the mortgage insurer may impose similar conditions. These conditions push a lot of borrowers, and particularly first home buyers, out of the market. So, what can you do?

How much should I spend on building a new home?

Rather than wait until you can afford to build your ‘ultimate dream home’, why not build a home that you can afford now and build the dream home later.  

How do I get a construction loan when building?

Should you use a home loan or a construction loan? The truth is you should use both. When you buy your land, you’ll purchase it using a home loan, but if you want to save thousands of dollars while your home is being built then you’ll want to take out a construction loan for the amount needed to build your home.

How and when do I get pre-approval when building?

Here is a basic list of things you’ll need to supply when applying for pre-approval. The lender you’re applying with will have a more detailed list of what they require to assess your pre-approval application. The amount you’ll be able to borrow is calculated on your personal financial position across the board. Applying to borrow money is an information-gathering exercise. It can also be a time-consuming exercise, and you can waste time if you have to have numerous meetings with your broker because you don’t have everything they need to assess your situation.

How do I choose a bank when building?

A mortgage broker seeks, finds and compares home loan products from a vast pool of banks and lending institutions. They have access to the best deals currently being offered by the banks and will know where to look to find a solution that will be best suited to your needs. They are the go-between agent between the borrower and the lender.

How do I set my budget when building?

So how much is your budget? Let’s look at what you can really afford to build for your building budget. Your building budget is a simple equation: Savings + grants + loans = budget. Plus, if you’re a First Home Owner you will need to learn how much you’re eligible for in grants and concessions. Now, before you even begin to look at what you can build, think about what you can reasonably afford.