Browse Forums Building A New House 1 Oct 31, 2014 2:31 pm Hi Can anyone provide some advice on providing a construction loan contract to the bank? Scenario - A loan over the land is 175k - We now plan to build a new home on it and ideally have a mortgage of 580k maximum. - We have 50k spare in an account and will use it towards the loan/house as needed. - The bank says to avoid paying lender’s mortgage insurance they must deem our final product to be worth at least 725k. They don’t expect an issue with this. We are now having our plans quoted. The builder, who is not a large project home builder and has a reputable reputation has recommended leaving some enhancements out of the contract with the bank (such as caeserstone benchtops, electrical upgrades etc). They have even said banks will sometimes accept the contract without floor coverings included. They have said this may ease gaining finance and the rest can then be done as variations. Our concerns is that if there are particular expenses we already KNOW we want included, we would prefer them to be explicit in the contract so we have a clear idea of the final costs and minimise variations. I suspect the builder is worried about finance falling over in terms of spend/final value and doesn’t want to have to redo the contract. Aren’t we better off getting as much as we can in the contract, and if there’s an issue with the bank then varying it? What if any advantage is there to us to leave things *out* of the contract? Doesn’t this mean we will then need to fund variations from our own pocket rather than the mortgage? I guess it means avoiding too many provisional allowances if we aren’t sure what we will need. Obviously we accept some variations will occur but are trying to minimise them. Can someone more experienced in this area please help? Thank you! Leksie Industry type domestic contracts are prepared by industry bodies for the benefit of the builders. This means that if you are the owner watch out. One of the points is… 0 3262 Hello, I am currently working on a study in regards to building contracts in Australia. I would like to interview people with their building experience in Australia and… 0 283 MBA and HIA both have sub contract agreements, check them out 2 7378 |