Q: What do I need to prepare before seeing a broker?
A: At the initial meeting, a broker will generally need to know employment and income details, information about any existing debts you may have (such as loans or credit cards etc.) and details of any savings or equity you may have. This key information will assist the broker to advise you on your borrowing potential and determine suitable lenders for your required lending.
Q: When buying a home, how much deposit will I need?
A: Each lender will have different deposit criteria, however a minimum of 5% of the total cost of your house and land package plus costs is generally required as a deposit. Choose an experienced broker with many lenders available (such as Rob Frew) as they will be able to determine the best lending structure suited to your deposit and individual requirements.
Q: People keep telling me I will need to have genuine savings as my deposit. Is this true?
A: This is the case for many lenders, but depending on your own individual circumstances an experienced broker may still be able to assist when your deposit comes from various sources i.e. from a family gift etc. A number of lenders will also consider rent payments towards genuine savings. Talk to your broker to determine how you can form your genuine savings, or if your deposit already qualifies as genuine savings.
Q: What will my repayments be whilst the new home is being built?
A: Whilst the new home is being built, you are not required to pay the full loan repayment but instead interest-only repayments based on the balance of your loan each month. This is much less than the full loan repayment and assists you to still manage your existing living expenses i.e. rent whilst the home is being built.
Once the home is complete, the repayments will switch to the full standard repayment. The bank or the broker can outline your month by month loan repayments for you so that you have a clear guide on what your payments will be during each month of the build.
Q: My bank told me I can’t use the First Home Owners Grant (FHOG) for construction and I have to find a new home that is already built. Is this true?
A: Every lender has their own policy regarding the use of First Home Owners Grant funds as part of the deposit. Many quality lenders are happy to allow these funds to make up part of your deposit on a construction loan. For more information about how this may apply to your personal borrowing situation, contact your broker.