I will make it straight to the point.

my sister and I are planning to build a house from scratch on a plot of own land.

my question is, is the type of loan applied to build the house the same as applying a loan to buy a ready build house? if so, how do we know how much to borrow since the house were not even started to build yet? how do we calculate the estimated cost required to build the house? will the builder give the estimated cost?

my next question is, my sister just started to work as a government school teacher last month, we plan to build the house this year but the government loan only allowed to be applied after 1 year of work, so is it "ok" to apply loan from private bank 1st since they only required 3 month salary slip, then refinance it after she qualified for government loan? will there be any penalty? is it worth?

yeah I know its kinda rush but since the material cost is lower now (mainly steel) so I think its suitable time to build one now.

any advice is appreciated, thanks

lady boss (sorry - I am assuming u r a lady),

1. When in doubt - call your friendly & trusted banker....assuming u have one....they are the best person to advise you.

2. Take my opinion with a +/- 20% deviation. Firstly, of course it's possible for banks to finance your house which is under construction. Banks will assess credit risks the same way your SP Setia is buidling a house. The difference now is that YOU are the SP Setia being evaluated.

3. I presume by now u are in the midst of getting your buidling plans approved by the local council. If not, pls engage an experienced architect immediately. The architect will work together with a QS to advise the bank on the construction cost and eventual value. Similar to properties under con, the architect will advise the bank at each stage of completion for progressive disbursement.

4. Together with a Architect and QS, and independent valuer will also have to be engaged to assess the value of the plot of land.....so there u have it.

5. Not too sure about rates and MOF though - never did your kinda project before....not enough mullah for that.....u have to check with your banker for details.

6. Considering your sister just started work - the odds are stacked heavily against u in terms of getting a bank approval, 3 months payslip or not. I assume your sis does not even file tax returns yet. Your logical bet is to do a joint loan to increase your credit standing. I assume u are in a position of good financial grounding then.

7. The above is only my opinion. Pls note that i am not here to assess whether u can afford the contingent liabilities which may ensue. Only here to help u with whatever little knowledge i have.

good luck.

This post has been edited by Phoeni_142: Feb 13 2009, 01:10 PM

ermmm thanks for the advice but I don't understand most of what you have said.

asssuiming that I am a total newbie, well infact I am a total newbie in this thing, explain in more easier term...

You posted a fairly complex question. Unfortunately, the answer isn't simple.

Any "simpler" would be misleading on my end and pointless on yours.

Long story short - It can be done by the banks. However, the only chance u have of succeeding are via a joint application.

Lastly, be prepared to engage many other stakeholders like the architect, QS and Valuer.

Sorry. Don't know how to make this any simpler.

Let's start somewhere simpler.

Find an experience real estate agent.
I suggest you talk to him and whether he can give you suggestion.

she's building a place from scratch.

not buying subsale. (based from her post, anyway)

I know, but don't underestimate what a real estate agent might know.
TS need to find an experience one who knows people.

Hey pal.

This is not about underestimating or overestimating anybody.

It's about being logical.

She asked a financing question - one which is fairly complex - which most Mortgage specialists may have problems answering.

I just asked the Mortgage Business Head at my bank the same question posted by the TS....He had to explain the process at length to me, and he had to seek clarification at the same time. These transactions are rare.

Bottomline - financing question - you approach a banker, as he or she should be the subject matter expert. Others may know - but in such a specialised field - I doubt it.

I do not think that anybody are doubting the real estate agent knowledge, however it is about going for the right and authorise party with the right advise. You won't ask a vet about human medication, right? You look for a doctor.
The real estate may have the knowledge to advise, but just as layman not professional.

The best option is to ask the right channel in the bank since they are the financier and they will know what document and procedure would be require. (may vary from bank to bank although similiar)

Yes, some banks will give you a loan.

You need to have the approved plan or the building.
You will have the cost if you already have the plan from the architect.

From the cost, BANKS will make a valuation check on the building plans/cost.
They will give you a loan like from the range of 60-70% from the valuation they get.

Your sister just started work. Previously? Working or studying?
If this is her first job or her previous job also did not last long.... Pretty much possibly banks won't give you a loan. Unless you have been working for a long time and your income is enough to pay for the loan.
Reason being, she just started, not confirmed staff blablabla ... so her 'documents/profile' are considered as weak.

Penalty? OFCOS there are penalty. Heard of LOCK IN PERIOD? Normally it is 5 years. Which means, you got a loan from a bank today. You refinance within 5 years, you will be charge a penalty. (normally 3% from your original loan amount) Worth it? Why is it worth it? Current bank rates are around BLR - 1.7% = 5.95 - 1.7 = 4.25% .. what is goverment loan rate? 4% .... difference of 0.25%? If your loan amount is low, the difference is like few ringgit ..


Why bother to rush things? Unless u are superb in planning/organizing... rushed works will only make u regret in future...

edit : I am property agent. Was a banker.... hmm....

This post has been edited by ed0gawa: Feb 16 2009, 03:34 PM

thanks for the replies guys, yeah I guess the best is to ask the banker

is the "lock in period" like the minimum period for the loan?

lock in period is where the bank wants you to stay with them so that they can get their profit...

During lock in period, you still can refinance, but with penalty.
After lock in period, you can refinance/sell the house/change the ownership blablabla with no penalty ...

It's very hot here in JB, I'll make my answer short before I run somewhere else.

Seek an experience property agent.
A good one would have contacts to a contractor.
Relaying your queries to him, he will give you a rough guide on the cost on your house.

The agent would also know mortgage broker and lawyer.
Where contractors have contacts to an architect.

Get your team together and discuss your problem.
Have your team help you.
Best if they know a developer and he is willing to mentor you through your endeavor. Good luck.

wrong post

This post has been edited by jwrx: Feb 16 2009, 10:37 PM