Home Finance
First Home Buyers
If you are embarking on the exciting journey of buying a home for the first time, we can help. Our mortgage brokers specialise in construction finance and can provide all the information to get your home loan approval started.
What is a construction loan?
What's different about construction finance?
Do I qualify for the First Home Owner's Grant (FHOG)?
How much money can I borrow?
How much deposit do I need?
When to place a deposit
What is Lenders Mortgage Insurance (LMI)?
What other costs should I consider?
How much is Stamp Duty?
What types of loans are available?
What do mortgage brokers do?
This is a loan which provides funding for building a property. Construction loans work by allowing progress payments to be made during construction, allowing your builder to access enough funds at each stage of construction to continue their work.
At the beginning of construction, borrowers pay only a small proportion of the overall loan and as each building stage is completed the loan amount increases until it finally reaches 100% of the loan amount. To help manage expenses during construction borrowers pay interest only, changing to principal and interest repayments upon settlement.
What's different about construction finance?
Construction loans are different than finance to purchase an existing home. The major differences are in the loan products which are available for home builders, the steps in arranging finance, and in the way your legal contracts are structured.
The easiest way to understand the ins and outs of construction loans is to review some of the differences and talk to one of our construction finance experts today. Check who is your local broker today.
Do I qualify for the First Home Owner's Grant (FHOG)?
The Australian Government is offering great incentives to encourage the purchase of your first home. These incentives vary by State and include the First Home Owner Grant and Stamp Duty Exemptions, starting at $7,000 for most eligible first home buyers. Our Brokers can provide all the information you need depending on your circumstances and cost of your new home, or you can review the information at www.firsthome.gov.au.
This will depend on your income, your existing assets and on the requirements of individual lenders, but you can get a good idea from the borrowing capacity calculator. A Stockland Home Finance broker can provide a full genuine pre-approval so you can place your deposit with confidence, knowing that you can obtain finance in time for settlement.
In recent times banks have been tightening their lending criteria, but there are still lenders who are giving 100% loans. In general, you will need around 5% of the loan value as an owner occupier. The rules will vary between lenders and are tightly linked to your individual situation, but we can help you work that out.Keep in mind that if you don't have a 20% deposit you will also need to fund the costs Lenders Mortgage Insurance (LMI). See below for more information about LMI.
Depending on the lender borrowers can also obtain gifts from relatives or friends or use a guarantor to help fund their new home.
Tip: When considering your loan application lenders like to see a consistent savings history, paid off credit cards and bills, as well as a good credit record.
If you plan to purchase a home (or just land) within the next six months you should obtain a genuine finance pre-approval from a qualified mortgage broker or lender. These are normally valid for three to six months and can be extended if necessary, but they give you the confidence to know your finance can be approved when you need it.
Some website offer quick online pre-approvals. These are general indicators only and don't apply to your specific circumstances. Importantly, they do not provide guarantee obtaining finance until a lender has reviewed all your documentation.
Note: It's advisable that you do not place a legally binding deposit for your purchase until you have a genuine written finance pre-approval from your mortgage broker or lender.
What is Lenders Mortgage Insurance (LMI)?
LMI is applicable for loans where the borrower's deposit is lower than 20% of the loan value. It is paid by borrowers as insurance which protects lenders in case the borrower can't service the loan. An experience mortgage broker from Stockland Home Finance can advise you how much LMI you will need to pay and whether it's possible to capitalise this expense in your loan.
What other costs should I consider?
Buying a home requires some preparation with your mortgage broker to ensure you've planned funding of all the costs. Some expenses can be added to your loan amount while others will be immediate expenses which you may need to cover separately.
Some expenses to prepare for include:
- Land Deposit. When using Stockland Home Finance you'll benefit from a reduced land deposit offer.
- Builder's deposit.
- Lenders Mortgage Insurance (if required).
- Legal fees.
- Loan establishment fees.
- Stamp Duty.
- Purchase of fixtures or fittings which aren't included in your building contract.
- Connection fees for services like electricity and phone.
- Removalists.
Stamp duty varies in every state and depends on the value of your property. See our stamp duty calculator or ask us to work it out for you.
What types of loans are available?
You have a lot choices and can select a loan that's suited well to your needs. There are options related to interest rates, redraw facilities, additional or advance payments, frequency of repayments and line of credit accounts. We can make it easy by providing easy-to-understand explanations and discussing the pros and cons.
Mortgage brokers act on behalf of numerous lenders to sell the lenders' products to borrowers. Stockland Home Finance works with over 20 lenders with a combined portfolio of hundreds of loans.
Whilst many brokers and lenders exist construction finance is not their speciality. And because the construction loan process is unique at Stockland Home Finance you'll get the added benefit of expertise from brokers who know construction inside and out.
When you visit a broker they conduct an independent analysis of various loans, quickly comparing the lenders' products by using a sophisticated database. This frees you up from doing the running around yourself and enables you to discuss all the loan options in one place.
Borrowers are not charged for this service. Brokers get commissions directly from lenders. The amount they receive varies by lender and it will be disclosed in your final loan contract.
