Best bank for resi construction loan? ANZ or Homeside?

Discussion in 'Property Finance' started by theperthurbanist, 16th Aug, 2012.

  1. theperthurbanist

    theperthurbanist Member

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    Hi guys,
    So I am getting close to purchasing my first IP/duplex development project and a about to go for pre approval.

    Given my maximum borrowing power is pretty close to the amount I will need during the height of the construction phase, my mortgage broker has suggested it is a good idea to see which banks will lend me the most for the construction stage (on top of my IP loan), and then from that list see which is the best for the initial IP loan stage.

    It has pretty much come down to ANZ or Homeside on cost alone (with Homeside slightly better), but I am wondering: does anyone have experience with using either of these banks for residential construction loans? Is there much difference (ease of generating progress payments, etc)? Any other banks known as the 'best' or 'worst' for this sort of thing?

    Any other general thoughts on what I should look out for will be much appreciated too.

    Many thanks!
     
  2. Ace in the Hole

    Ace in the Hole Don't compete, Dominate !

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    Have had a contruction loan for a duplex build not long ago with HSL, pretty simple and easy.

    However, shouldn't your broker be explaining all this to you and advising/choosing the best option for you, based on who is best to deal with?
     
  3. mattnz

    mattnz Member

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    I did similar with Westpac recently and received really crappy service with long delays. It took 3 months from application, to my builder receiving his first payment.

    My personal experience with ANZ for slightly larger sites of 5-6 townhouses has been great. They are particularly good for developments that have a high profit margin, as they will fund based on GRV, rather than development cost.

    NAB are really bad for larger sites, they won't even consider GRV and only do 70% of development cost. Not sure what they are like for a duplex, but if you are planning to eventually do larger sites, I would suggest building a working relationship with ANZ ahead of NAB / Homeside anyday!
     
  4. Rolf Latham

    Rolf Latham Member

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    Hi Perth

    That logic is the exact opposite of what I would do assuming you wanted to grow your investment portfolio in the future

    Use the lowest serviceability lender you can squeeek it through and retain the use of the higher ser lenders till later

    On that basis ANZ is the best fit

    ta
    rolf


    ta

    rolf
     
  5. Marty McDonald

    Marty McDonald Mortgage Broker Syd

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    Depends on LVR. ANZ max is 70% for anything with two or more dwellings on a title. Homeside 95%.

    ps if your broker didnt know that re ANZ G.A.B. (get another broker).
     
  6. theperthurbanist

    theperthurbanist Member

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    Cheers Rolf,
    I certainly agree with 'going with the tightest lender first' as a general portfolio building strategy, however in this case I think I am going to be close to my limit on my FIRST project! So it is only the 'most generous' lenders who really allow me to do what I want.

    Truth be told, I have a reasonable cash position (but low income, hence my borrowing capacity issues) and could get by with a smaller loan by topping up the rest myself, but my preference is to get the max loan I can, leaving me able to use my cash in an offset account, and therefore have as little cash as possible tied up in the project.
     
  7. theperthurbanist

    theperthurbanist Member

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    Thanks everyone for the replies so far.

    Ace & Marty: Indeed, my broker should be providing me with this advice, and he certainly has been giving me his opinion about who not to go with (amongst other things), but I guess I always like a second opinion on a decision as major as this (yep, first time analysis paralysis!), and whilst he is a good broker, nothing beats the combined opinions of SS forumites (if you will excuse my brown-nosing)!
     
  8. theperthurbanist

    theperthurbanist Member

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    I will only be looking to construct one dwelling (I plan on retaining the other). I was under the impression that most banks were around 80% LVR for this, and my broker hasn't suggested otherwise, so thanks for raising - I will definitely question him on this one.
     
  9. Aaron_C

    Aaron_C Finance Broker

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    80% is easier but you can go above it if need be.
     
  10. Marty McDonald

    Marty McDonald Mortgage Broker Syd

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    A duplex would be considered TWO dwellings on one title by ANZ
     
  11. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    In terms of service for actually getting the progress payments completed, both ANZ and HSL use difference processes, but I'd say the service levels are comparible. Both of them do this reasonably well (it hasn't always been the case but things have improved with both lenders).

    Given it's your first project, there's probably not much difference in the two lenders for servicing at this point. The same would be said if you want to increase the loan to access equity on completion. For additional IP purchases, the HSL affordability calculator is clearly more generous than ANZs.

    As using the lower servicing lenders first, there's good logic to this. Before being certain of this however I'd want to make sure that the lower servicing lender will suit the goals of this project, plus what you intend to do with the property immeidately after the project is completed. You may need to increase your lending via a top-up post-completion if you're to move onto another project. I wouldn't recommend a lender who isn't able to do this. You need to finance this property with the next step in mind.
     
  12. theperthurbanist

    theperthurbanist Member

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    Thanks a lot for the feedback guys - really appreciated.

    Looks like I am going to go with Homeside: best rate/fees/package, generous affordability calculation (required for me to get my construction loan approved) and sounds like they offer decent service.

    Cheers for the input.
     
  13. Qlds007

    Qlds007 Broker,full time investor

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    Service is fine in getting the deal approved but as long as dont need loan documents or settlement in the same month you should be fine.
     
  14. home146

    home146 Member

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    ANZ construction loan vs homeside- which bank is better

    Hi Perth,

    We are going to build a duplex in Sydney soon and need a construction loan. Just wondering if if you were with Homeside and would like to know if their service is good? Thank you.
     
  15. Rolf Latham

    Rolf Latham Member

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    cant speak for OP, but our service from HSL is good

    next day approval, docs to client 24 to 48 hrs later

    ta
    rolf
     
  16. Aaron_C

    Aaron_C Finance Broker

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    HSL have really picked up their game in the past 3 months or so. As Rolf said 24 hour turnaround (48 hours if LMI involved) and docs issued promptly after.
     
  17. Terry_w

    Terry_w Member

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    I just had a construction loan approved for a forum member client today with ANZ. It was very painless and documents have been produced already - on the same day as the approval.
     
  18. Colin Rice

    Colin Rice Perth Mortgage Broker

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    Homeside will go to 95% sub 1Mill up to three units.

    They also appoint a 'case manager' meaning the broker deals with one person all the way through to completion.

    I also have been receiving above average service from Homeside but have also fixed up a few bank stuff ups pre and post approval as well.

    Make sure your broker/you checks the loan docs for correct interest rate and structure as they can get this wrong at times. Also get your broker to request a better rate than what is carded as they are negotiable on this.

    I have even been invited to two lunches at posh restaurants in the last few months so must be on their radar :cool:
     
  19. Colin Rice

    Colin Rice Perth Mortgage Broker

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    Also had some decent experiences with ANZ.

    I don't think they are as bad as Rolf makes out :p

    But maybe haven't been dealing with them as long as he has so might have to check back in ten years on that!
     
  20. Aaron_C

    Aaron_C Finance Broker

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    It was delicious at Vue de Monde a few months ago :)