Construction loan pre-approval expiry

DomoKB · Nov 01, 2018 12:11 am

Hi everyone!

We had pre-approval with our bank since 19th Sept and this is valid for 3 months. We had the contract appointment and have signed the contract with the builder today (31st Oct). The builder has reinforced to us that the price on the contract can vary due to colour selections, electrical appointments etc. that come afterwards. The price can also change subject to council/CDC and BASIX approvals.

So our bank has asked us to submit the executed fixed price contract to proceed with formal approval of the loan. We are confused whether they mean the contract we signed today or the final contract once all the appointments, council/CDC and BASIX are done? If the bank is wanting the final contract price, then we won't meet the 3 month expiry deadline of the pre-approval. I hope this makes sense.

Cheers,
Dominic

Melos · Nov 01, 2018 6:53 am

The bank will want the full contract with the full price which will include the terms and break down of the payment schedule etc. is the contract a tender contract or the full building contract?

DomoKB · Nov 01, 2018 7:37 am

We have signed the full HIA building contract.

InvincibleInDN · Nov 01, 2018 8:45 am

DomoKB

Hi everyone!

We had pre-approval with our bank since 19th Sept and this is valid for 3 months. We had the contract appointment and have signed the contract with the builder today (31st Oct). The builder has reinforced to us that the price on the contract can vary due to colour selections, electrical appointments etc. that come afterwards. The price can also change subject to council/CDC and BASIX approvals.

So our bank has asked us to submit the executed fixed price contract to proceed with formal approval of the loan. We are confused whether they mean the contract we signed today or the final contract once all the appointments, council/CDC and BASIX are done? If the bank is wanting the final contract price, then we won't meet the 3 month expiry deadline of the pre-approval. I hope this makes sense.

Cheers,
Dominic

Hi DomoKB ,
Bank needs the final price. You mentioned that you will have Post Contract Variations (PCVs) due to colour selection etc. That means, you can get the pre-approval for the eligibility of your financial situation now. Then you can get the final approval when all the PCVs are finalized. Usually, the builder will issue an invoice at the end of DA/CDA approval articulating all the PCVs and final cost. Also, you need the final plans, electrical plans, etc for the bank to valuate your build (not sure how they do that). So, don't stress now.

I am at this stage now. Submitted all the documents last week to bank and waiting now...

Thanks.

kks · Nov 01, 2018 12:57 pm

Customer in glare of headlights: "OK, I'll sign that car sales contract and then we can talk with the bling-person about adding the auto, and the sun-roof, and the bonnet protector, and the paint-protection next week. Lovely, I'm so happy with the deal...."

DomoKB · Nov 01, 2018 2:31 pm

Thanks for your replies everyone. Yes you are all correct, the bank wants the final contract price. They said if the pre-approval expires before we get the final contract price, we will have to re-submit all the documentation again eg. payslips, bank statements etc. to extend the expiry.