Hi there,
we have bought a block of land that settled in April. Finally we have everything together to build our first IP. We have been approved for an increase through RAMS (it took Verrryyyyy long). But I don't like some topics in the contract. They tell me that all loans during constructions are interest only, BUT in the contract they state "the first repayment is due on 01 October for $2.072 …That is principal and interest. I really don't like to sign that. Customer support is absolutely HELPLESS and they say, just ignore that, because it has been calculated on the basis when the build is finished. Even worse is the local branch !! NO IDEA WHAT"S GOING ON! I am so mad
and I would like to change to another lender all over…but that would involve exit costs?? Any ideas ? Anyone out there building an IP with RAMS ? Can I ignore this part of the contract ?
THanks for your help
THomasHi Thomas.
There is no excuse for service like that in todays day and age. You are not under obligation to proceed with anything if you have not signed anything yet. I would not sign a contract either if the repayment amount was incorrect and no one could explain it to me. By all means you can change to any ledner you want, ……. I imagine you only have a 'land loan' at this point (with intention to build). You will have an exit fee on your origianl loan – may be worth it if you are not happy, depends on the price of your land originally I guess. COnstruction loans are the most likely ones to cause headaches with any lender, and there are a few different ways they are done also. Gotta keep those builders on side too!.
All the best.
Hi v8ghia,
thanks for your post. Yes, I think you are right ! I shouldn't except these sort of loans. It's our first IP we want to build and this
makes us a real headache. I got a good offer from another lender for a better rate but they need to have the land – otherwise they can't do it. So I might, refinance all over with the land. Maybe the better rate compensates for the exit fees. But RAMS is really not to recommend (and they have given us a very low valuation and haven't even considered recent land sales in this area).
Yes, I think it's time to move on …
Thanks again for your help
ThomasMost lenders will require the land as security and do it all as part of the construction loan THomas, although in some cases with a higher LVR it is not always the case. This is the norm however, and if you can get something that causes you less anxiety and with a better rate and service to boot…..go for it. All the best with your first IP. keep us posted!
RAMS don't generally allow construction loans through brokers. I think if you have a land loan with them already and approach them later, they may be able to assist – this suggests it is not something they specialise in. Assuming it is a low doc, you may be better off with St George or Macquarie Mortgages. If a full doc, St George is my favourite.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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