Browse Forums Home Finance 1 Apr 01, 2015 10:51 am Hi Guys, We have purchased a land and have got land loan sorted out through CBA directly. The land is going to be titled in August and as there was a "subject to finance clause" we got conditional approved loan from CBA. The only condition is the valuation of the land before it gets titled. If all well then its great. We are talking to few builders in terms of building house on the land after it gets titled. I am confused about Construction loan. I want to get Driveway, Downlights and fencing done before we move into new house. After speaking to some builders sales guys, they advised that it is better to get driveway , downlights and fencing done through 3rd party as it will be cheaper for us. I spoke to CBA and they advised that they dont accept 3rd party quotes but only build contract will be looked at when applying for construction loan. I spoke to 1 small builder and they are ready to put that in the contract and at the end they will give that money back to us less GST but i have to provide them with the invoice. For that I need to have an ABN to provide invoice which in turn it is going to be an income for me and then i have to pay taxes on that. So what it means to me that either we do it externally or through builder more or less it is going to cost the same. This is quite complicated We are really confused as to how do we move forward to get everything done from our loan. The reason we want to get everything done from our loan is because we have sufficient savings but what if something goes wrong we wont be in position to get them done afterwards. we also want to get the loans sorted through 1 lender and going through the forums i have noticed there are not many lenders/banks who are ready accept the 3rd party quotes. please advise and thanks in advance Y0u R tH3 Cr3@t0r 0f y0Ur 0Wn R3@L1ty Re: Construction loan confusion 2Apr 01, 2015 11:39 am Hi Psyherin, You can get your quotes included in the valuation with other lenders -the trick is they won't release the money for those items until the work is done, so you have to negotiate with your suppliers to wait a few days for payment - generally you send photos to the lender to show it's done and they release the funds to you. You benefit from the higher valuation up front which means you potentially pay less in mortgage insurance (if you're in that territory) and you have the loan already approved for these items. Happy Building!! Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Construction loan confusion 3Apr 01, 2015 2:30 pm Hi Bec, Thank you for the information. what I understand by this is that there are other lenders in the market who can accept 3rd party quotes but CBA is not 1 of them. Do I approach a Broker or the bank? Also would like to know when do we approach other lenders to apply for a land and home loan. I think if CBA doesnt allow these things then i wont be going ahead with them. Y0u R tH3 Cr3@t0r 0f y0Ur 0Wn R3@L1ty Re: Construction loan confusion 4Apr 01, 2015 2:37 pm Ultimately it's the valuer who has to comment - and it depends on the percentage that you're borrowing - I believe CBA will do it also but only of you know how to put it together so speak to a broker and see what your options are - they know how to present it well. Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Construction loan confusion 5Apr 03, 2015 12:20 pm Hi Psyherin, We discovered this with NAB also. So to make things easier, any items we were planning on after handover we decided to pay ourselves. There are a few ways you can do this but his is what we did. It all depends on what disposable $$$ you have. Construction Price minus Construction Loan = Amount you deposit. Rather than take out more on the loan we decided to deposit less. Because we put majority of our deposit on the Land Loan already we are still clear of the mortgage insurance. I hope this helps. Re: Construction loan confusion 6Apr 05, 2015 12:04 pm becjarrettdalton Hi Psyherin, You can get your quotes included in the valuation with other lenders -the trick is they won't release the money for those items until the work is done, so you have to negotiate with your suppliers to wait a few days for payment - generally you send photos to the lender to show it's done and they release the funds to you. You benefit from the higher valuation up front which means you potentially pay less in mortgage insurance (if you're in that territory) and you have the loan already approved for these items. Happy Building!! This^ I had my lot cut and retaining wall erected before handing the site over to metricon. Fortunatly, I had the 15k savinga needed for this and will add the cost to the construction loan. The only downside is that I wont get it back untill hand over. The 15k will then be used to furnish my home. Re: Construction loan confusion 8Apr 14, 2015 9:29 am I am in the process of getting a construction loan with Commonwealth. I've recently re-financed from NAB to CBA for my current home which settles on Thursday (can't wait for this to happen). The funds left over from the refinance (to bring this house up to 80% LVR) will form the deposit for the construction loan. The land I've put a deposit on etc will not be on title until late June/July and I've sent through a few things to the bank to assist with the valuation/construction loan, including the signed land contract, a preliminary estimate of the build as well as a separate quote for concreting. I was advised by the lady I deal with @ CBA that I can have quotes for extra stuff (i.e. landscaping, driveway etc) as part of the construction loan as long as I have the quotes to go along with it. Tomorrow I believe the valuers will visit the land, although, I fail to see how they are going to do that when no roads are yet built to the said land . This kind of makes me nervous since I only have a 21-day finance clause in my land contract. Given the demand in the area too, if I did ask for an extension (at the request of the bank, which can happen) they might say no and sell it to another interested party. Anyway, see how I go, and good luck with your construction loan. Re: Construction loan confusion 9Apr 15, 2015 10:23 pm Hi Psyherin: I suggest we look at St. George Bank. The reason is St. George Bank could possibly get a valuation for your before the construction is finished. You always can refinance you land loan with St. George Bank as well. Valuation play an important in this situation. The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 20086 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 36595 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 12360 |