Best rate from NAB for Vacant land home loan for construction (Investment Property)

[Lashkari]

Hi All,

My wife and I have entered into a Contract to buy a block of land in the ACT for $370,000. The Loan is due to settle in the 30 January. We have already paid the Stamp Duty, so we are able to put down a 20% Deposit on the Land to avoid Mortgage Insurance. We want to start construction on the Land in about 10 to 12 months time. My estimate the Build price to be approximately $500,000. We would then be looking at a 90% Lend and would prefer a loan where we pay minimum/no mortgage insurance.

It is our first home, however we look at it as an investment property. So we prefer to stay at current rental unit and rent the new one out.

The loan has already been approved by the CBA under their MAV/Wealth Package at a variable rate of 4.95%. However, I started to shop around seriously and I found some good variable rates with Pacific Mortgage Group (The lender is "Australian First Mortgage" - originally from NAB Advantedge Financial - and their advertised & comparison rate for land & construction is 4.62% with no other fees), Wide Bay Australia (special rate for land & construction 4.65% - evidence is available), Suncorp (4.69% with no other fees only for the land), CBA Wealth Package (4.70%) (From different broker for both land & construction), NAB Choice Package (4.78% for the land, with a promise of a better rate for the construction from NAB mobile banker).

At the first step I found the Pacific Mortgage Group Construction home loan very attractive, and I was really impressed by their amazing rate and features. One of the best features of this loan is that it does not attract any application, valuation, and settlement, monthly or annual fees. Their loan gives flexible repayment alternatives, offers unlimited redraws, and allows salary crediting and direct debit. The redraw facility that they offer is very similar to offset account but a bit different. Having offset account for loan is crucial to me. Another drawback to me is the Pacific Mortgage Group does not have any branches inside Canberra.

Again, I continued to shop around and found a reliable lender with a branch in Canberra with a very reasonable rate. CUA broker, for the loan of the land ($296,000) under package of "Fresh Start Variable Home Loan" offered me rate of 4.65% with comparison rate of 4.66% (no fees). Sine, I am not going to construction phase within the next 10 to 12 months, and due to CUA has no exit fee for this package and also it comes with %100 offset account, probably it is the best option for me at this stage.

But for the construction phase, because I will not be in the range %80 LVR, I cannot continue with CUA. So, I am looking for the better rate or very close to my best rates (4.62% - 4.65%), including 100% offset account preferably with no/waived/minimum upfront, ongoing and exit fees for both land and construction. In addition, due to positive experience with NAB and NAB services in the past, directly or indirectly (like UBank) I even preferred Pacific Mortgage Group at the first stage. I would really appreciate if you could give me advice how to get a close rate to my best rates (4.62% - 4.65%) under NAB Homeplus Package.

Also, I found someone in Whirpool forum who got the rate of 4.63% very recently from NAB:

http://forums.whirlpool.net.au/forum-replies.cfm?t=2277554&p=11

Many thanks.

 

[D.T.]

Is rate your only criteria?

 

[Lashkari]

Priorities I would like to consider include:
1st has Construction Facility;
2nd has minimum/no mortgage insurance (if possible);
3rd has an offset account with flexible repayment alternatives like unlimited redraws, and allows salary crediting and direct debit;
4th has line of credit;
5th variable loan package with minimum possible rate and fees (upfront, ongoing and discharge fees) for both land and construction;
6th good reputation of being a reliable lender; personally I prefer NAB, if I can have a close rate to my best rates (4.62% - 4.65%).

 

[D.T.]

So you don't plan on getting any investment properties them?

 

[Lashkari]

My Plan is for investment. Why do you think it is not for investment?

 

[Rolf Latham]

1st minimum rate (only variable) and fees; 2nd having an offset account; 3rd having a branch in Canberra; 4th good reputation of being a reliable lender; personaly I prefer NAB, if I can have a a close rate to my best rates (4.62% - 4.65%) with them; 5th minimum/no mortgage insurance (if possible).

An online lender of some sort perhaps will meet your number one goal.

may pls I ask what the basis is for making rate number one, when LMI is like many thousands in one go ?

ta

rolf

 

[Lashkari]

No/minimum LMI was and is my first priority if I can get rid of that. However, I got some advice from some brokers which I cannot do anything for that. Any advice?

 

[Scott No Mates]

No/minimum LMI was and is my first priority if I can get rid of that. However, I got some advice from some brokers which I cannot do anything for that. Any advice?

You can always stump up a bigger deposit, that will reduce the LMI.

 

[albanga]

My Plan is for investment. Why do you think it is not for investment?

The point being made by D.T is that lender choice for property investment should be your new number 1 priority. This unfortunately is beyond my level of expertise but the gurus on here will point you in the right direction.
Basically the choices you make now could severely hamper your ability to invest in the future, their are magnitudes of issues with an incorrect early choice such as drawing on that equity, the way they calculate the servicing, LMI policies.etc.

In a nutshell he asked because if you want to invest in property and you choose rate as your number 1 preference then all good for this purchase but come IP3 and you will know why the low rate chasing was perhaps a bad idea.

 

[Jamie M]

1st minimum rate (only variable) and fees; 2nd having an offset account; 3rd having a branch in Canberra; 4th good reputation of being a reliable lender; personaly I prefer NAB, if I can have a close rate to my best rates (4.62% - 4.65%) with them; 5th minimum/no mortgage insurance (if possible).

Hiya

Check out loans.com.au, ubank or similar.

Cheers

Jamie

 

[Lashkari]

Probably no one read the whole story, above. I am looking for the cheapest construction loan with %100 offsect account and branch facility in Canberra. Ubank does not provide loan for construction, and also no offset account. loans.com.au only accepts applications for the land and construction together in the same time; not for our case which we want to start construction on the Land in about 10 to 12 months time.
As I mentioned above I am looking for a reliable lender like NAB with the cheapest rate. I have read a post in whirpool forum, someone got the variable loan package for $500k+, LVR approx 85% with the rate of % 4.63. The best rate I got from the NAB is % 4.78. For my scenario, is there any possibility to get a better deal like 4.63% from NAB; if so what is the best rate could be and how can I get that?
Many thanks.

 

[euro73]

Think of this like a game of snooker. Imagine you have several shots to choose from today. Is sinking the one easy shot the goal, or is sinking all the balls the goal? Rather than taking the most obvious shot, pause and consider where you'd like to place the white ball for your next shot, and the next shot after that, etc..

Cash Out Policy is important to me . This determines how easily I can access equity for future purchases. If you choose a lender where you have to go back and jump through hoops to access your equity, you may end up having to refinance - and that can be expensive. Easy access to my equity matters.

Up front valuations are also important to me. I transact several times per year and use lenders where I can get properties re-valued without having to submit an application, which reduces my credit enquiries substantially. This is key when I want to draw out equity to 90% across several properties each year and then make several 90% purchases. Credit scoring matters to me.

Servicing Calcs are also important to me, especially as a portfolio grows.

Then comes rate. Basically, I'd rather pay 0.1 % or 0.2% more ( which is actually less than that when you account for neg gearing) and be able to get cash out without being subject to a royal commission, value properties as required without needing to make credit enquiries, and not run out of borrowing capacity too quickly, than save 0.1% or 0.2% and be snookered earlier.

You'll be surprised how few brokers, and certainly how few bank staff have experience at building a substantial portfolio with a client, and mapping out a clear lender strategy to get you there... so do choose your advice wisely. There are some clever brokers on here. Seek them out and listen to their advice. Ask them whether they can provide you with examples of where they have helped clients get into 4,5, additional properties when their banks had told them they couldn't borrow any more. moral of the story? Put rate considerations in your bottom draw if you want to buy several more INV properties. If this is the only INV property you plan to purchase you should ignore everything written so far and take the CBA or NAB offer because you have said branch access is important to you.

 

[Lashkari]

Euro73 thank you for your constructive advice. As I mentioned in my first post I would like to find the best possible deal with NAB. But I have no idea what is the best rate could be possible for my case. For the land ($296k loan) NAB offered me 4.78% and NAB broker offered me 4.80%.
I have read a post in whirpool forum, someone got the variable loan package for $500k+, LVR approx 85% with the rate of % 4.63. Is that possible for my case to get this deal from NAB? If so, how can I get that; through the bank or brooker?

 

[D.T.]

Why do you have such a love affair with nab? How many IPs do you have? How many more do you want?

You see, nab is one of the more generous lenders. So, typically (assuming you're as new to investment as you sound), you want to keep nab as an ace up your sleeve for when you really need to use them. Make use of the tightass lenders now because in a few properties time, you'll never be able to use them again.

Rate isn't in an investors top 5 criteria.

 

[Lashkari]

Hi D.T.

Yes, surly I am new starter in this field, and it is my first exprience. I am open to learn, that's why I am here. Please forget about NAB or everything else, what will you do if you were in my place? Which Bank, which priorities and ....? Please consider my settlement date as well (30 January).

Many thanks.

 

[D.T.]

You'd need to see a broker that specialises in investment properties to work that out. It depends on 100 factors and what you're trying to achieve. Presumably you want to buy more properties after this one?

Your broker can help you forge a path forward so that all the subsequent places are approved as well.

 

[Lashkari]

I had a very bad experience with brokers. At the first experience, broker offered me the rate of 4.95% for CBA, and he assured me it is the best rate I can get from CBA.
But when I started to shop around seriously I found better rate of 4.70% from CBA. Also, I had another experience with another broker for NAB, he offered me 4.80% which NAB mobile banker offered me 4.78%.
I will be very grateful if you introduce me a reliable broker that specialises in investment properties in Canberra who just doesn't think for the commission only, and consider my needs first and then other factors like his/her commission.

Many thanks.

 

[albanga]

I am pretty sure Jamie M is based in Canberra and is a brilliant broker. He has commented on this thread already.

 

[euro73]

Euro73 thank you for your constructive advice. As I mentioned in my first post I would like to find the best possible deal with NAB. But I have no idea what is the best rate could be possible for my case. For the land ($296k loan) NAB offered me 4.78% and NAB broker offered me 4.80%.
I have read a post in whirpool forum, someone got the variable loan package for $500k+, LVR approx 85% with the rate of % 4.63. Is that possible for my case to get this deal from NAB? If so, how can I get that; through the bank or brooker?

You keep coming back to rate. Its important to forget rate for a moment. Put it to one side for the time being. After all...is the cheapest car the best car for your needs? Is the cheapest TV the best TV for your needs? Use lenders that will get you to your end goal ( ie the next 3,4,5 properties) and THEN consider rate. As I said earlier, if you have no plans to get more than this INV property, just take the NAB or CBA deal at whatever the best rate is and move on... but if you want to go beyond one INV property you should PM Jamie - he is local and can assist you. If you try and deal with the banks yourself you will get stitched up, cross collateralised and in a few years time when you try and get a 2nd or 3rd or 4th property and your bank has cross collateralised you , you will learn that the advice being provided here is shaped by years and years and years of experience and wonder why you didnt take it Rate rate rate will NOT get you rich rich rich if you use the wrong combination of lenders .

 

[Marty McDonald]

From my experience with what the op has said so far I fear they will always go for rate as no 1 priority no matter the evidence presented to the contrary. We could go on and on but I do feel the op belongs on rate city not SS at this stage.

For clarity nab direct and nab through brokers is slightly different so one might have 0.02% cheaper rate but one has a higher annual fee, really two different lenders. The CBA offer sounds like a bait and switch to me with the construction loan pricing (bigger total overall loan) being quoted.

CBA would be a good middle servicing lender to start with but cash out over 80% is a bit tricky. Still better than nab IMO as with their servicing should be kept till later.