Does Bank require building permits before full appproval?

Hi All,

I am currently waiting for loan approval from the CBA. I'm told my application is currently at valuation stage. Does anybody know if the CBA require bulding permits before they will issue full loan approval or if the valuation comes in at the contract amount, is this the point where the bank gives full approval?

The whole process seems so convoluted with all parties playing the blame game with the other and never actually seeming to get anything done.

Any feedback would be greatly appreciated.

Thanks!

when we got full approval we still at that stage hadn't received DA from the council.

Our valuations also came in 5k more than the contracted amount whcih gives us some breathing room.

They usually dont need it for approval but will require it before they start making progress payments on the loan.

They do not need the Building Licence for approval of the loan, but when it's at the stage of the 1st progress payment they will ask your builder for evidence of council approval.

Thanks for the feedback.

If only my broker/bank got results as quick.

The builder needs the building licence to build, they also need finance approval... so if the bank needed the building licence to approve.. there would never be a house

Hi All,

I'm going with CBA too and just want to ask whether we need building permit to get formal approval. The bank manager asks for building permit before getting formal approval but builder wants formal approval before lodging for building permit. We are confused on what to do. Any CBA clients had to go through this??? Any help is appreciated.

Thanks in advance.

I can only go by my experience.

Permits were order by the builder 2 days after contract signing. Contract went off to bank for full approval about a week later.

Full approval provided for mortgage about 8 weeks later.

Permits were back OK 2 days later.

So therefore, no builder didnt need formal approval prior to lodging permit and no the bank did not need the permit prior to giving full approval.

We're with the CBA too. They only needed the signed buiding contract to do the valuation and approve our loan. Building permit wasn't part of the process.

oh wow, what a headache. Can you get your builder to call your mortgage rep? Our builder is dealing with ours and it makes life so much easier. She is on top of it and has bascially sent through all the paperwork the bank needs and is speaking to our mortgage lady regularly. She only calls me to update on progress and if they need any other personal information.
Sooooo much easier than having to run around trying to deal with both parties yourself.

Hi all,

Thanks for the responses it's very helpful. I talked to the contract administrator and she said we definitely need to provide them with the formal loan approval in order to proceed with the building permit. Now just have to get in contact with the bank manager and advise her. Definitely a big headache.

Hello Everyone,

In my experience as a lender and broker I have found that formal approval can be obtained without having full permit approvals.

Plans and specs are a definate must in order for the bank to arrange valuation etc.

These are provided to the valuer who in MOST cases will look at it and come back with.. Land purchase price = X dollars and the construction contract = Y dollars therefore value is X+Y. In some cases they will be slightly different but rarely.

In order for full approval banks need to check 3 main areas. Income/Employment, Credit report, Valuation/Security.

If these 3 add up. All is good for formal approval. Income and credit report are done up front and are the simplest. Valuation is based on the land plus the specifications/construction contract/plans.

Provided that the Council Approved plans are the same as those submitted for valuation then there is usually not an issue.

Realistically your builder SHOULD reasonably know what they can put on your block of land prior to council submission. After soil testing and engineers workout in order to put the contract together they have a pretty clear idea of what will be allowed and what wont be.

To go into CBA alone. They require only 'Tender' as they put it .. laymans terms a construction contract/specs etc. to go to unconditional approval. However, prior to issuing their commencement letter they require the council approved plans and insurance notifications etc.

Regards,

Trent