Before you buy - Part 3 Organising Finance
You have decided to take the exciting journey of building your new home, so where do you start? The simplest process is to organise your finance, land and then the house, in that order. Starting with your finance is always a good place to begin as you need to establish a budget that you can service and one that you feel comfortable with.
Organising your finance from the start means you will know how much you can afford to spend and what your weekly repayments will be. Getting your ducks in a row will also help, if you happen to come across a home and land package that you are interested in, your focus will be entirely on whether this is the right home for you and your family, rather than worrying about finance.
In House Finance
At Celebration Homes we want to be with you every step of the way, so whilst you are busy researching your perfect home and finding the ideal block, we can take care of the finance so you know exactly what you can afford.
Our in-house finance team at Resolve Finance will look into all your financing options and shop around between banks for you. The team are committed to helping you spend the right amount of time ensuring your home finances are structured to offer the best value for your needs. We also offer advice and assistance for first home buyers looking to apply for the First Home Owners Grant in Perth. After all, getting your finances right could mean the difference between affording that double vanity or double shower upgrade that might be on your wish list.
Construction Home Loans
Resolve Finance are specialists in construction finance loans, with over 80% of their home loans written being construction loans. Construction Home Loans are very different from a standard home loan. There are additional complexities around the process that may appear difficult or confusing and it’s easy to get overwhelmed. Without specialised knowledge and an understanding of your situation, these key differences can make a huge difference to your finance and the building process.
As Resolve Finance know precisely what is needed, they work closely with both Celebration Homes and any other parties for you so that the finance process happens smoothly with no unnecessary building holdups. This means you can enjoy your new lifestyle as a homeowner sooner!
FAQs
There are many differences between a construction loan and a standard loan and one of the most obvious is that your lender will make progress payments to your builder as your house is being built. These are payments made at key stages of the building journey and for Celebration Homes are when the slab has been laid, when brickwork is complete, when Roof Cover is complete, your home reaches Lock Up, and Practical Completion before you receive your keys.
The payments you will need to make at each stage (and are generally interest only until the home is complete) gradually increase until your home is finished, when you start paying your full monthly repayments.
The amount of your monthly repayments will vary depending on the following;
- How much you borrow
- What the interest rate of your home loan is. If you opt for a variable rate loan, your home loan rate will go up and down depending on the Australian interest rate. With a fixed rate, your home loan rate is set at that rate for a certain period of time and won’t change. Your Resolve home loan specialist can discuss the pros and cons of each loan, based on your individual situation
- The length or ‘term’ of your home i.e. is it 30 years
- Your repayment frequency i.e. fortnightly or monthly
- Whether you’re making principal and interest or interest only repayments
It’s important to consider not just how much you can borrow, but how much you can comfortably repay each fortnight or month on your home loan. This includes not only looking at your income and all your expenses, but also factoring in potential interest rate rises and whether you can still comfortably make your mortgage repayments in that instance.
Borrowing capacity is usually calculated by reviewing your income and expenses as well as any other debt that you may have, such as car repayments or credit cards.
Lenders need to be confident you can make your regular home loan repayments, and if you have a lot of other debt they might think twice about giving you home loan approval. So every debt you have reduces your total borrowing capacity. And it’s important to note that with a credit card, it’s your limit that’s counted towards your debt, not your current balance. E.g. If you have a $15,000 limit on your credit card, the bank will reduce your total borrowing capacity, even if you haven’t got any money owing on the card.
Our in-house team at Resolve Finance can help you determine how much you can borrow and what home loan options you may qualify for to build a new home.
Resolve Finance are an award-winning mortgage broking firm, operating in Western Australia and Victoria. Established in Perth in 1997, they have become one of Australia’s undisputed leaders in the home finance field with 1 in every 20 of all construction loans in WA financed by them. As Celebration Homes’ key finance partner, and part of the ABN Group, Resolve operate within the same building as Celebration Homes and work hand in hand to help customers achieve their home ownership.
And the best part is that Resolve doesn’t just do construction loans – they can be your mortgage broker for life.