Browse Forums Building A New House 1 Aug 19, 2014 9:43 am Hi Guys, Been reading the forums for few years now to prepare myself when I finally build my house. Guess it's time now I have a question which I am not getting a proper answer from either the bank or the broker. I am looking to buy a block of land, then sign a contract with a builder to build (who is building within that estate already). I want to take some parts of the building work and source it to contractors to save some money. For example, I wanted to save on driveway costs, fencing, installing solar panels etc. Was trying to find out if I can use part of my home loan to pay these individual contractors (registered and licensed for the work). I thought, if for example I get an approval for a $450,000 home loan, and I exclude all these work from the builder's original quote of $440,000, then my build cost comes up to $400,000. Now I have $40,000 to spend on getting the driveway, solar, fencing, landscaping etc. And I think I need to get quotes for these bits of work and submit it along with my building contract to the bank during loan application. If this is possible, how does final valuation/settlement work? Does the bank settle with the builder with the $400,000 after valuing his work, and then does valuation for the individual contractor works to settle their part of payments? Or does the bank wait for the entire work to finish and then settle final payments for the builders and individual contractors after that? Would really appreciate some advice on this. Regards, Sidds Re: Including contractor price in home loan amount 2Aug 19, 2014 10:09 am We had to increase our existing mortgage to pay for such things, but BEFORE the construction-loan was taken out. Our bank wouldn't let us increase our construction loan to cover anything the builder wasn't going to do. Re: Including contractor price in home loan amount 3Aug 19, 2014 11:27 am Forg We had to increase our existing mortgage to pay for such things, but BEFORE the construction-loan was taken out. Our bank wouldn't let us increase our construction loan to cover anything the builder wasn't going to do. Thanks for the reply Forg. So I should put in the construction quote and then the individual quotes of the contractor and everything should add up and stay within my pre-approval limit? Was it all done via one loan application or did you have to take out a second loan for the contractor work? Regards, Sidds Re: Including contractor price in home loan amount 4Aug 20, 2014 8:30 am shadowarrior Hi Guys, Been reading the forums for few years now to prepare myself when I finally build my house. Guess it's time now I have a question which I am not getting a proper answer from either the bank or the broker. I am looking to buy a block of land, then sign a contract with a builder to build (who is building within that estate already). I want to take some parts of the building work and source it to contractors to save some money. For example, I wanted to save on driveway costs, fencing, installing solar panels etc. Was trying to find out if I can use part of my home loan to pay these individual contractors (registered and licensed for the work). I thought, if for example I get an approval for a $450,000 home loan, and I exclude all these work from the builder's original quote of $440,000, then my build cost comes up to $400,000. Now I have $40,000 to spend on getting the driveway, solar, fencing, landscaping etc. And I think I need to get quotes for these bits of work and submit it along with my building contract to the bank during loan application. If this is possible, how does final valuation/settlement work? Does the bank settle with the builder with the $400,000 after valuing his work, and then does valuation for the individual contractor works to settle their part of payments? Or does the bank wait for the entire work to finish and then settle final payments for the builders and individual contractors after that? Would really appreciate some advice on this. Regards, Sidds We were in the same situation as you. We are with CBA and all they require is a quote from the companies/company doing other work than than the building. We have just had our final progress payment to the builder and the bank just came and inspected the work was all done. They said they will revalue the whole house when the rest of the work is complete. Re: Including contractor price in home loan amount 5Aug 20, 2014 11:14 am We are with CBA as well and are borrowing for more than the construction costs to do these types of things. The builder will be paid through progress payments and then we'll get the rest when we need it. We gave them quotes for all of this work so that it could be taken into consideration for the valuation. Not sure what effect that had, luckily the land had gone up. 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 19068 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 35305 WOW you are spot on. Those trees are on council land and have already caused significant problems. A few years ago the builder had to come back and install a root barrier… 7 2442 |