FAQs

Useful FAQs & resources:

• Is my house and land deposit refundable?

  • Yes and No!! Your land deposit will be refundable if you signed the O&A subject to finance. If you are declined your deposit should be refunded. Builder deposits are NOT refundable.

• I do not start making repayments until my house is completed?

  • INCORRECT!! With a bank you start making Interest payments on the portion of the loan that is drawn down at that point in time. Keystart is an exception where you can choose to pay a minimum of $50 per week during construction.

• I can make changes to my house after formal approval?

  • Once your loan is formal the bank has agreed to lend you the money based on the assumption that you are building the house they valued. If you change the home you are technically voiding the contract with the bank. However small cosmetic changes are sometimes allowed if you pay for them out of your own pocket. Keystart will not allow any changes after formal approval.

• My loan is completely approved after it is Pre-approved?

  • NO… Pre-approval is still subject to a number of lender conditions. The main one being the bank valuing the proposed construction. You have not met your finance obligation at Pre-approval stage. On a percentage you are probably 60% there.

• Can I extend my finance due date?

  • YES. Finance extensions can be granted by land agents if you have solid grounds to do so.

• Is the building sales rep a licensed real estate agent?

  • NO. They do not hold any licence or regulation; a land agent must be a registered real estate agent however.

• What are site works and Bushfire allowances?

  • Allowances built into build contracts to cover certain criteria on the home needing to be met to meet shire requirements.

• When should I do my pre-start?

  • If you wish to add this to your mortgage it will need to take place prior to your broker ordering a valuation on your property. Most builders will build a pre-start allowance into the contract in case you are delayed doing this. Be aware a building rep will shave this off if they are trying to get you a lower price on a house.

• If I pay $50 per week during construction with Keystart do I save money on Interest?

  • NO All the interest that you do not pay during the construction of the home will accrue and will drop into your loan as a lump sum when fully drawn down.

• What are Genuine Savings?

  • Requirement
    Where the Loan to Value (LVR) is above 90%, the borrower must provide at least 5% of the purchase price from genuine savings.

    Definition of genuine savings
    Genuine savings is defined as a demonstrable savings pattern established over a minimum period of 3 months in the name of at least one borrower prior to the loan application.

• Definition of genuine savings

  • Genuine savings can be from any of the following sources:

    • Accumulated savings (savings account)
    • Sale proceeds or shares or managed funds (net any tax due)
    • Equity in or from real estate
    • After tax bonuses from employer (provided amount is excluded from income for NSR capacity assessment)
    • Non preserved superannuation contributions (provided the borrower has access to funds in cash form, and minimum employment conditions are met)
    • Additional loan repayments that are redrawable
    • Borrowed funds
    • The sale of real estate or additional borrowings against real estate, held in the name of at least one borrower for a minimum period of 3 months prior to the loan application being received is acceptable provided:
      • The service calculation includes the repayments for the borrowed funds
      • The source of the borrowed funds are fully disclosed
        • Borrowed equity cannot come from builder or vendor
    • Gifts
    • Where funds come from a non-repayable gift are being used to complete a purchase, the gift must be from an immediate family member and be held in an account in the name of at least one borrower for a minimum period of 3 months prior to the loan application. Immediate family members are:
      • Spouse/De facto partner
      • Parents/Children
      • Siblings
      • Grandparents/Grandchildren
    • Inheritance
    • Where funds from an inheritance are being used to complete a purchase, the inheritance must be from an:
      • immediate family member and be held in an accountant solicitors trust in the name of at least one borrower, for a minimum of 3 months prior to the loan application
      • Immediate family members are:
        • Spouse/De facto partner
        • Parents/Children
        • Siblings
        • Grandparents/Grandchildren
        • Term Investment
    • Lump sums (e.g. term deposits) that have been held in an account in the name of at least one borrower for a minimum period of 3 months prior to the loan application.

    Not considered genuine savings:

    • Government grants/rebates (including FHOG)
    • Gifts (not from immediate family members)
    • Inheritance (not from immediate family members)
    • Advance on wages/commission
    • Barter Card or other swap negotiations
    • Builder discount/finance or any form of incentive
    • Proceeds from gambling
    • Proceeds from illegal activities
    • Rental discounts
    • Vendor Gift/discount/finance/rebate or any other form of incentive
    • Advantageous/favorable purchase
    • Lender finance of 5% deposit
    • Borrowed funds (e.g. personal loan)

• What is LMI (Lenders Mortgage Insurance)?

  • LMI covers the lender in the event of the borrower defaulting on their loan. If the property is subsequently sold and the amount from the sale is insufficient to pay the loan off in full, this insurance will cover the lender for the shortfall. The insurer may then exercise their legal right to recoup this shortfall from the borrower. The lender applies for LMI not the borrower and the insurance should nor be confused with Mortgage Protection Insurance. The fee for LMI is paid as a once only fee at loan settlement and varies depending on the amount of money being borrowed and the Loan to Value Ratio (LVR).