Keen to find out from the members who are building a new house. What interest rates you are paying on construction loans? Was it through directly with the bank or broker? Which bank? During the construction, is it interest only? Is the interest rate different if constructing owner occupied home or investment? What would be the rate after handover?
Thanks in advance.
Contruction Loan Interest Rates
Comments
True, but getting other OZB'ers do the legwork for you is half the fun
Interest rates are going to vary a lot between banks, you can always negotiate a better one, ours is ~3.2% for P+I on investment rates. We went through a Broker friend. The loan works the same as any other loan, you can choose principal + interest, or interest only.
Rates are higher for investment than owner occupied, but this can also be negotiated and changed at any time (a broker helps a lot with this, we will change it after our construction is complete).
I suggest getting a broker if you're new to find the best plan for you. Ours was fantastic and negotiated lower rates for us and a tailored home loan package.
On a side note, the loan is the easy part. The construction can either be great fun or a nightmare depending on the company you choose to build with.
The construction can either be great fun or a nightmare depending on the company you choose to build with.
Come on then, name and shame your construction company….
Hi, could you refer your broker by pm if that's alright?
Loan shark rate is 48% in NSW, so 48%.
I work for a bank and in my experience…
What interest rates you are paying on construction loans? generally fixed rates are not available and variable rates are same rate as an established home. If you chose IO during construction it may be a higher rate though. Some banks even have different rated based on the percentage you are borrowing against the value (LVR).During the construction, is it interest only? Generally you can chose either…IO may be more affordable if you are paying rent till the construction is complete…the interest rate may be higher but keep in mind at slab stage the loan may only be ($land +) 20% of construction cost but closer to completion it may be ($land +) 90% of construction costs. ie near the end of construction you will be paying 90% loan repayments plus rent till you move in. If that does not matter starting off as P&I will save you interest in the long run.
Is the interest rate different if constructing owner occupied home or investment? Generally the investment rates are higher
What would be the rate after handover? generally the loan will continue as the same rate unless you contact the bank to negotiate. If you go IO for 1 year it will likely revert to P&I rates automatically after that.
Overall speak with your bank and negotiate a better rate than they advertise. I expect most will be able to offer around a 0.1% discount in branch/over phone and possibly 0.5% or more if you plead your case and demand it get escalated to management….some even offer cash back offers…it all depends on the bank and your loan size.
Get a loan from a mob. No paper work required. All they would need is your kidney and half a bladder as a collateral. Cheaper than most bank loans in the long run if you think about it.
Will be 8% all round soon enough
thanks @peppet @Mulga Bill and everyone
A lot of your questions outside of rates could be answered by any of the construction loan pages at the major banks webiste.