When people think of building loans they often think that all the banks offer the same.
Of course they all do have building loans available, but they are not all the same.
Westpac Make Improvements To Building Loans
As mortgage brokers that specialise in building loans we are always reviewing the banks loans and making suggestions for change.
We work with a lot of Kiwi’s that are building new homes and also hear of others that have been frustrated by the inflexibility of these types of loans.
After all, when you are building a home you want to be able to focus on the decisions that relate to the build instead of having to worry about the finance.
There are two specific changes that do make the Westpac building loans a very good option.
The two changes are;
- The pre-approvals now remain valid for 12-months
- The final drawdown can take place when the valuer provides a completion certificate
Let’s look at these two changes to the building loans in a little more detail.
When most banks issue a pre-approval for any home loan it will expire after 60-days or 90-days.
This has caused a number of issues for people that are building new homes using a turn-key contract as often the new home will not be completed within the timeframe of the pre-approval. It has caused people to worry about finance more than they should need to.
Mortgage advisers were constantly getting finance approvals updated which was causing a lot of extra work and no extra benefits.
We have now seen Westpac recognise the problem and come out with a pre-approval that is valid for 12-months.
Of course there is still a clause that means the bank can reassess the application should anything major change during that 12-months. So make sure you try to keep your job and do not get tempted to go out and borrow money for a new car.
The Final Drawdown
Most banks will only release the final drawdown of money once the Code of Compliance (CCC) has been issued.
It has often meant you can be looking at a finished home but are not able to take possession and move in. The frustration when this happens can be huge and people often think that the banks are being unreasonable.
The banks have and most still retain 5% of the build cost until CCC has been issued.
With lower cost builds this amount is not too much and often you may have some savings that you can use so you can get to move in upon completion, but when the build cost increases the 5% can amount to a large amount of cash and that often means that you cannot make that final payment until the CCC is issued.
These are two changes that Westpac have made and which mean they should definitely be considered more often.
For good advice on building loans you can contact us.