those who had a mortgage already and built another new house...
How big is the house you are looking at? Cos the build guarantee won't always apply (well you will still get paid x amount per week they are late but don't expect the actual build to be on time. Lots are I hope yours is one.
When you get a construction load with periodic drawdowns you only pay repayments on the amount you have drawndown. If you want interest only repayments it may affect the type of loan you have to apply for depending on the lender.
We built our house while selling so had to do both lots of repayments at once, and it was when the variable rate was over 9%
It was hard. But no worse that when I was on mat leave and we were on a much lower income.
Still you need to work out the realisitc repayments and the lender or broker will help with this. Then you may need to make decisions like do you need internet etc if it comes down to that.
Not sure if this applies, but when we built our house we had the option of paying full repayments in the progress or $50 a fortnight for the period of construction... Is there something like that you could look at with the bank?
So it meant we accrued more interest and thus a slighlty larger mortgage overall, but saved the doubling up on rent/repayments etc...
Building a house is surprisingly slow. We were told 9-10 months from start to finish. We're at about 4 months now and haven't even chosen what colour we want the damn thing to be! We're expecting this to drag on for ages, and then at 9.5 months a truck will just turn up with a house on it without warning and we'll be running around like chooks with their heads cut off trying to get finance.
Just thought I would mention it is worth talking to your builder and seeing if you can negotiate payment / settlement on completion.
Not all builders will allow this (particularly not the smaller companies) and it does cost a bit more (Added 10k to the IP we are building, plus extra stamp duty), but gives you more flexibility. By paying on completion, the builder covers all the costs throughout construction and you just need a normal home loan for settlement (like you would if your were buying an established house). So there are no repayments until after you have settled.
oh and building houses often blows out time wise. Our PPOR was 12mth past when we were originally told. And our IP was supposed to be completed in Feb 2010, but they have only gotten around to starting it in the last month, for various reasons. Hopefully it will be completed by christmas (although I won't be upset if it is January as that is a much better time to try and rent it out for a premium).
Thanks for the tips girls, Lime will definetly look into what you've said. fingers crossed, i reallllllllllly want something in the works asap. moving sucks as it is, but when ur monsterously pregnant...even less fun!
We changed our mortgage repayments to interest only while we built our current house and then kept it that way while we were trying to sell it. Meant that things were a bit tight money wise for a few months, but it was a lot easier to deal with overall.
We had different lenders for the 2 mortgages though. That was just the way it was set up through our broker
I have done it, and we went on to keep our other property as a rental, but have almost officially sold it now (waiting for the money to hit my account in 2 weeks time )
The timing sucked construction started a LOT later then it was supposed to and they poured the footings when I was still in hospital with DD after she arrived. So it put a huge amount of stress as I wasn't working for as long as we had planned and it really threw a spanner in the works. But we got there in the end.
I would do what you can to reduce as much of your outgoings as possible, you should be able to pay interest only on the construction loan while building, and see if there are any changes you can make to your current mortgage to make it easier. Best to go in and have a chat to your home loan manager or bank manager, they can really help out, and best to do it upfront rather then when things get tight or tricky.
Remember too that your bank will release the money to the builders in 3 stages - so you wont be on full repayments until the final handover.
Land, slab and final completetion, and you only mke repayments (and interest) on what the bank has already laid out.
those who had a mortgage already and built another new house...
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