Which Bank to Go With for a Land and Then Construction Loan

UglyPanda on 07/07/2016 - 16:35
Last edited 07/07/2016 - 17:22 by 1 other user

Hi all,

We are buying a land first and then will go for a builder. We have got 20% of the total loan plus fees saved. With so many offers we are a bit confused. Loan amount is $500K.

NAB 4.05% plus Velocity points and $395 annual fee.
Westpac 3.75% for two years then we have to switch
Pacific Mortgage Group 3.7% and comparatively low rate always
Bankwest 4.02% plus $395 annual fee

Because we will be building, we have been advised not to go with online bank. So we are a bit confused as to who do we go with. We also want a bank that will process fast. We have clean credit history and we work for the government. i.e. Some banks prefer to lend to government employees.

Cheers!

Poll Options

• 0
  Nab Package 4.05
• 6
  Westpack Low rate 3.75
• 0
  Pacific Mortgate Group 3.7
• 0
  Bankwest 4.02

• 

  Looking4Bargians on 07/07/2016 - 17:05

  +1

  The one which can offer re-draw/offset and no ongoing fees.

• 

  naritas on 07/07/2016 - 18:43

  +1

  Generally speaking, if you've got a good credit rating and are willing to jump through some hoops perhaps Newcastle Permanent may a better long term solution than Westpac. At that kind of loan size you'd probably be looking at 3.74%p.a. (CR 4.10%p.a.) on their Premium Plus package (which delivers a 100% offset account and fee free redraw) - you'd likely qualify for some kind of rebate at settlement too. That being said, the Westpac offer has been very popular with us and the rate is appealing, however, if you're chasing cost efficiencies there is a redraw fee that is typically applicable and you will likely need to set an agenda to re-evaluate your loan in a couple of years as the rate will jump up noticeably at the end of the 24 month intro period.

  NB: YMMV and naturally you'd want to get some proper advice based upon your individual circumstances and/or confirm figures directly before committing to anything.

  Hope this helps.

• 

  captobvious on 07/07/2016 - 23:18

  +1

  Go with a bank that has a dedicated person that you can correspond with directly as they tend to organise inspections quicker and take ownership. This helps a lot during a build to make sure each milestone is completed, inspected and the money released in within a reasonable amount of time. this reduces delays on your build, delays will cost you in interest. Doesnt cost the builder anything but we tend to reschedule and re purpose contractors for other builds which means you have to wait.

• 

  DrKB108 on 08/07/2016 - 14:36

  +1

  In the same situation: Purchased land first and then constructed house.

  We are with Mortgage House atm, because at time of purchase they offered the best deal (4.37% with offset). I'm now in the middle of refinancing to Newcastle Permanent (3.74% p.a. with offset).

  Re. online bank and issues: We had no issues. Simply send them an invoice for the progress payment and they send someone on site to check the work is done and pay the builder. The whole process takes 5 working days or so (from the time they receive the invoice from the builder). The KEY here is to have a good builder who does what they say!

  Be careful about having 20% of the total price. That doesn't always equate to a 80% LVR. Once you buy the land and submit the house plans to the bank, they will valuate what it's worth and lend 80% of that (if you want to avoid LMI).

  So whichever bank you go with ask if you have an option to contest the valuation. Good feature to have, especially if you can provide evidence that your house is worth more then what the valuations are coming it at.