The Bank

So before we really got into to looking at blocks we booked an appointment with the bank to find out what we could lend. We weren't sure how accurate the online calculators were. The lady was very good and explained how it all worked, some we knew from our own research and some we didn't. Lots of jargon.
They were willing to give us what we wanted provided we had a 10% deposit- which would still require $16,000 of lenders mortgage insurance.

So then we got the block and went back in to get offical pre-approval. Chatted for almost 2 hours. We had our rough estimates for the house back by then and had found out we would be over the cap for the first home buyers grant. She tried to talk us into cutting back to get it. We said we would look into it. She also was wary about how much we wanted to borrow as before they okay a home loan for building they have to value your house. If your house will sell for less then you want to borrow then you have problems.

We are very unsure as to where our house will value. She wanted to give us pre approval for  a home loan and a block but in the end as we couldn't agree on a price I asked for just the pre-approval on block only. We are still hoping to have a building contract by settlement so the loan is all done in one though.

So some things I've learnt:
The bank pays the builder in stages and you only pay interest on what they've paid out.
Your house is valued by the bank to make sure if you go belly up, they can make their money back.
If your loan is substantial you might be able to negotiate the initial interest rate.
The banks are often happy to meet outside business hours and are happy to answer all your questions.