Looking for a construction loan

[Bipolar Bear]

I'm looking for a construction loan for about $380K with 80% LVR, with a re-draw facility. I'm buying land separately and getting a house built by a building company.

I have been offered a few options. It looks like either the interest rate is very high during construction period (5.95% by AMP) or the fees are too high (ChoiceLend), and sometimes both (CBA). I've also looked at Suncorp, Maquarie and a few others. I am wondering if there are any better options or the banks/CUs will get their share either way...

Would appreciate your opinion on this.

Mortgage brokers: please contact me via PM.

Thank you in advance

 

[Terry_w]

Plenty of these loans out there and this is straight forward so you shouldn't have any problems. You would have been swamped by MB PMs now.

 

[Mick C]

AMp for construction you kidding me right- unless there is a good reasons for AMP " and to be honest there's never a good reason for construction with AMP"i can't see why you were even offered that lender.

1. rather than redraw go for a 100% offset...

2. Land + construction loan 80% you have a few options in the low rate range
off the top of my head...
St George - 4.74-4.79% or lower
NAB- Sub 4.65%
Some credit unions - 4.38-4.44%

etc....

Same rate for land and build- no rate loading.

+ 100% offset...

3. rate is one thing...the most important comparison is the Set up cost or " progress payment cost" during the build

it can range from $200- $1000...which is huge given your small loan amount...so the rate now becomes 2nd priority ( but def not over 5%)

4. What are your short and long term plans for the house? and your buying strategy ( is any)?

 

[Mick C]

Mortgage brokers: please contact me via PM.

Why dont you Pm or contact the broker of "YOUR" choice....
Dont understand this PM me thingo ...it's like a car sales pitch ...lol

 

[Peter_Tersteeg]

I have been offered a few options. It looks like either the interest rate is very high during construction period (5.95% by AMP) or the fees are too high (ChoiceLend), and sometimes both (CBA). I've also looked at Suncorp, Maquarie and a few others. I am wondering if there are any better options or the banks/CUs will get their share either way...

Almost every lender offers construction loans.

ChoiceLend, AMP and Maquarie aren't really much chop for construction, I don't know why you'd even consider them.

Suncorp might be fine but might not depending on what your longer term plans are. A lot of people get attracted to Suncorp because they're currently very competitive, but they'll only cost you money if you're looking at a longer term investment strategy.

CBA have their place. They're generally not cheap, but under the right circumstances they can be. Again, they're a lender you use with consideration to the larger strategy.

There's no point in sending you a PM or making any sort of suggestions. There's no context to make them other than you are building and want a cheap rate. That's pretty vague.

It's clear from the lenders you've mentioned that you've already been in touch with a broker. Can you tell us why they made suggestions such as ChoiceLend, AMP and Macquarie? The only real reason I can thing of is your servicing is very tight. As a result you may not have many options.

 

[Bipolar Bear]

Thank you Peter and Michael.

The AMP option was the result of me changing my mind. I was going to purchase an existing property for investment, and their interest rate was 4.40%. Then I told the broker that I decided to build so they've changed the existing pre-approval to a construction loan which came at a 5.95%.

As to the lenders, I am after a 'good value' loan. You may disagree but I don't really care if I get a finance from a small financial institution. By now I'm totally aware about progress payment fees and how they may affect the overall result. That's why I was wondering if there are actually options with BOTH reasonable fees and interest rate. In terms of servicing issues, hmmm... I don't think this is the case.

I have suggested PMs so that I don't have to:
- chase the brokers who are too busy,
- answer personal finance questions and/or list my email address on a public forum.

Happy to contact you directly.

@Terry_W I didn't get swamped with PMs as apparently they are not MBs' preferred communication method.

 

[Rolf Latham]

AMP have a place that no other lender wants to fill

So if you have the capacity to pick up more mainstream lenders that bake bread every day, and do it well, CBA NAB and WBC all have good build programs, with generally excellent post settlement service ( ie progress payments).

AMPs main challenge is that they have a "special" product for construction, v most others its simply a feature of most of the their products

Im guessing the data you have been provided so far is non specific, because no broker would put Suncorp CBA and AMPin the same Statement of Credit advice, they are poles apart assuming you are a property investor and not a single property owner.

ta
rolf

 

[Bipolar Bear]

Im guessing the data you have been provided so far is non specific, because no broker would put Suncorp CBA and AMPin the same Statement of Credit advice, they are poles apart assuming you are a property investor and not a single property owner.

Thank you Rolf.
I guess it's the brokers who have suggested all three lenders were poles apart.

 

[Peter_Tersteeg]

Thank you Peter and Michael.

The AMP option was the result of me changing my mind. I was going to purchase an existing property for investment, and their interest rate was 4.40%. Then I told the broker that I decided to build so they've changed the existing pre-approval to a construction loan which came at a 5.95%.

What this means is that rather than submit a second loan with a better construction lender than AMP, the broker has simply used the existing pre-approval and made it construction appropriate. This gives you confidence that you'll get finance, but when the time comes they'll probably go to a different lender than AMP.

This is a reasonable thing to do for both yourself and the broker.
* The brokers previous work isn't entirely wasted.
* You don't get a second credit inquiry on your CRAA.

@Terry_W I didn't get swamped with PMs as apparently they are not MBs' preferred communication method.

Definitely not preferred. The Somersoft PMs are a terrible way to exchange information.