All Topics / Finance / Advice sought – how to not pay deposit (or interest on it)?

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  • Profile photo of Jen1Jen1
    Member
    @jen1
    Join Date: 2005
    Post Count: 26
    May 10, 2010 - 12:00 pm

    I have a deal I am considering at present. I have been offered a construction loan on 70% of the estimated completed valuation. This 70% will be enough to cover land, construction, contingency and capitalisation of interest during the build. I have equity available but serviceability on the 30% deposit would be extremely tight for me during the build.

    Is there some way that I can work this so that I do not need to pay interest on the 30% (as I really don't need any of it anyway)? is there some way you could offer equity instead (as you don't need the cash)? or pay down this 30% somehow up front? Can I capitalise interest on the deposit amount too? Advice/Ideas needed!!!

    Thanks,
    Jen

    Profile photo of House CallHouse Call
    Member
    @house-call
    Join Date: 2010
    Post Count: 165
    May 10, 2010 - 1:09 pm

    What about a line of credit loan for the maximum amount of available equity?

    That way you only get charged interest on what you use, while the rest just sits there available but not accruing interest. 

    Profile photo of Jen1Jen1
    Member
    @jen1
    Join Date: 2005
    Post Count: 26
    May 17, 2010 - 10:26 am

    Thanks House Call. I thought the same but when I spoke to the bank I got all confused about it. Some managers are not proficient at explaining things! Thanks.

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