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First Home Buyer | Suppliers & Partnerships

Loan Studio Q+A

27-04-2022

Loan Studio is a boutique mortgage brokerage specialising in construction lending and a trusted Arden partner. 

We recently spoke with Darsh Anthonige, Loan Studio’s Sales Manager, to understand what prospective homeowners need to know when it comes to financing their new home build.

  

Could you tell us a little bit more about Loan Studio?

Loan Studio began when our founders Colin Sheppherd and Sonia Rohlf understood the need for specialists in construction lending. Working in the building industry themselves, they often saw clients confused about the process and struggling with the big banks.

In 2013 we began working with Arden, and soon realised that we were on the same page. We’re both all about walking our clients through every step and making it easy.

And together, we’ve helped countless customers build their dream homes seamlessly!

 

What are the differences in applying for a loan for a new build vs an established home? 

There are some massive differences.

With an established home, it’s fairly straightforward. You might work with an estate agent and purchase at an auction or private sale. You understand what deposit is needed, you get one contract and settlement happens all in one go. 

But with a new build, it’s quite different. 

Firstly, you have two independent loan contracts – one for the land, and one for the build. As we know, details change – timelines, budgets, plans – so making sure the contracts align is really important.

The other major difference is that your payments happen in stages. Building usually happens in five stages – the foundation, framing and brickwork, lock-up, fixing and fit-off, and finally, completion. 

With construction lending, your lender will release the funds to pay your builder at the end of each of these stages. So, more than a typical loan, there’s a fair bit of admin for everyone involved.   

With all of those moving parts, it’s so important to have specialists who know the process. 

At Loan Studio, we have an industry-leading admin team who deal with the banks, the builders and clients. They receive the builder’s invoices, advise the bank of the values and help arrange for the payments to be released.

We know the questions to ask, the details to check and the pitfalls to avoid. 

 

If someone wants to buy a block of land, what are some of the things they need to consider beforehand from a financing point of view? 

At Loan Studio – and I know it’s the same at Arden – we’re really passionate about arming customers with the right questions and info.

First off, you want to be sure you’re in a good position to secure the lending you need. You need your deposit in order and your credit history in a good spot. 

Once that’s sorted and you’ve found your land, we recommend that you speak to a builder before making any formal lending applications. Some land has restrictions – you’ve got to consider inclines, slopes and frontage limits, so it’s best to engage a builder first. 

Next, you want to speak with experts – financial and legal – to understand your contracts. Be wary of varying titles, timeframes and settlements – once you’ve signed you could be expected to settle sooner than you’re ready. Do your due diligence and ask your builder and land agents plenty of questions.

And that’s where we come in – we make sure our clients know what to ask, who to ask, and what to check for. I can’t even tell you how crucial that is!

 

What steps should applicants take before approaching a lender to improve their chances of success?

The main step is to understand their credit history. These days you can get your credit file online, but even if you don’t know how to read it, take it with you to your lending appointments. 

You’ll need to understand where you are from a credit risk perspective. Sometimes people might not realise they’ve had missed payments or phone bills that have impacted their credit score. Even simple things like having multiple credit cards make a difference.

Also, bring your payslips. They’ll include all the details you need like super, bonuses and salary sacrifices. 

And finally, understand as much as you can about your expenses. We’re finding that for banks, they’re a huge thing at the moment. Even having too many Uber Eats or Afterpays can make a difference! 

For any kind of lending, a healthy three to six months of clear history will be ideal, but variables like income and expenses also play a part.

The truth is – that everyone is different. Modern responsible lending recognises that. So the best thing you can do is be informed about where you’re at, and speak to a qualified professional to guide you. 

 

Can you talk us through the importance of having pre-approval at the start of your building journey?

Having pre-approval is really important. First up, it helps you understand your borrowing power.

Secondly – you get early identification of any issues on your credit history so you can sort them out. 

Finally, it also means the time to full approval is faster. With credit policies changing all the time, it can give you peace of mind.

It only lasts 90 days, so make sure your timing is right. But again, have a chat with your qualified financial advisor about this one.

 

There’s so much talk around housing affordability at the moment. Are new builds a good option for people trying to get into the market?

Yes, absolutely. And we say that for three main reasons – it can reduce stamp duty significantly, there’s a wide range of building grants and supports available, and you’re ending up with a brand new, quality home.

And with the kind of sustainability measures Arden has in place, you’re saving on all kinds of utilities. Plus, with a new build, you’re getting exactly what you’re after!

 

In general, what other things should our clients be aware of?

Keeping across interest rates is really important, particularly as they’re looking like they’re set to rise.

Also, understand the difference between a fixed-rate (that’s determined at the time of settlement) versus a rate lock (that’s usually determined at the time of application). 

And again – above all else – make sure you speak to the experts. 

Financial advice should always be personalised and it changes over time. And those changes impact all parties – clients, builders, and financial institutions. 

So whether you work with us here at Loan Studio, or with someone else, make sure you get in touch with a pro!

Arden is very reputable in the market, and having a reputable construction lending specialist just makes sense.

At the end of the day, we’re all here to make sure there are no rescues, no stress and no headaches.

 

All information provided by Darsh was general in nature and should not be taken as financial advice. It is subject to change. You should consider seeking independent legal and financial advice before making any important decisions.

 

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