Home & Land Package

Which state ?

Regards
Michael

Hi,

a) Not to sure what your trying to ask??? also all banks are different how they view a construction loan.
b) I would be a bit careful here, what you declare to the bank will go directly to OSR- so in the forms if YOU say it’s for investment or declare potential rent etc…you may forfeit the FHOG. There have been cases where buyers declare to the bank as an IP to pass serviceability but later apply for the FHOG via OSR directly, OSR was forced to do a “investigation”.
c) Legal for you or the bank? i can’t see anything illegal from either party from what your telling us so far…unless you provide a bit more details.

As long as you can service the loan + no declared rental income then your fine…but
1. Don’t declare as an investment- the bank will still accept it as an PPOR ( only diff is rent you pay currently won’t be removed)
2. Don’t declare any potential future rental

I have not seen a bank reject the follow 2 options above ( especially if you can service the loan) , it’s up to you declare purpose not the bank.

Regards
Michael

That’s right, construction loan is paid as progressed payment, you start paying the mortgage once you get your 1st set of payment, so over the 9 month period, you will start with a small part of the loan/mortgage and it will increase as the bank release more funds.

There are normally 6 stages…The % is the % of the total loan cost.

1. Preparation — 5%
Plans, permits, connection fees, insurance, driveway crossings and soil test.

2. Base -12 %–
Concrete slab complete or footings and base brickwork complete.

3. Frame–10%—
House frame is complete and approved by building surveyor/inspector.

4. Lock-up—21%—
Windows/Doors ,Roofing, Brickwork, Insulation

5. Fixing–39%—-
Plaster, Kitchen cupboards, Appliances, Bathroom, toilet, laundry fittings/tiling, Heating
Fixing/internal doors etc, Plumbing,Electrical, Painting

6. Completion—13%–
Fencing, Site clean-up, Supervising builder

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Yes you will have an issue if you declare as investment …you risk the OSR rejecting the FHOG.

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It sounds like you have a serviceability issue, and that’s why the bank is declaring this as an IP as well- to let the “potential rent” kick in….i think you need to either;

1. Re-work your budget,if you can’t afford a $355 loan
2. Work with an experienced broker or ask different banks, as each bank looks at serviceability differently— especially over time etc…

Regards
Michael

From the bank’s point of view the rent you pay of $1,1000 is still a liability until you finish building because you need a place to live during this 9 month ( not the case with all bank’s though- so are willing to take on end debt as long as you have enough funds in savings to pay for 9 month i/o)

Regards
Michael