Browse Forums Building A New House 1 Oct 15, 2016 1:02 am Dear all, I have signed a contract earlier this week to buy an off the plan house. The construction is not started yet, but the builder (a private builder) is pretty confident that he would finish the house pretty fast, and has asked for settlement on 12 December this year. It doesn't sounds realistic but the builder is pretty confident that the construction would complete in no time. When my mortgage broker submitted the contract docs to the bank, they are giving only approval in principle at the moment subject to valuation at the time of completion. I was told earlier by my broker that the banks give formal approval based on the floor plans and inclusions etc. I wanted get some advice based on your experiences regarding how banks generally treat off the plan purchase. Do they generally give formal approval based on paperwork, or do they give only approval in principle with valuation condition? I have signed the contract subject to finance, but I need to secure a finance within 2 weeks. Is getting AIP good enough? Re: Lender only providing approval in principle - Need Advic 2Oct 15, 2016 6:38 am adityajoshi37 Dear all, I have signed a contract earlier this week to buy an off the plan house. The construction is not started yet, but the builder (a private builder) is pretty confident that he would finish the house pretty fast, and has asked for settlement on 12 December this year. It doesn't sounds realistic but the builder is pretty confident that the construction would complete in no time. When my mortgage broker submitted the contract docs to the bank, they are giving only approval in principle at the moment subject to valuation at the time of completion. I was told earlier by my broker that the banks give formal approval based on the floor plans and inclusions etc. I wanted get some advice based on your experiences regarding how banks generally treat off the plan purchase. Do they generally give formal approval based on paperwork, or do they give only approval in principle with valuation condition? I have signed the contract subject to finance, but I need to secure a finance within 2 weeks. Is getting AIP good enough? Hi Adityajoshi37, My bank required a signed contract to make a mortgage offer based on the amount of the contract, and their independent valuation. Make sure your contract has a subject to finance clause so you do not lose all your deposit. It takes wisdom to build a house, and understanding to set it on a firm foundation; It takes knowledge to furnish its rooms with fine furniture and beautiful draperies. Proverbs 24:3-4 Lender only providing approval in principle - Need Advice 3Oct 15, 2016 7:37 am Our bank requires a signed contract and council approval documents (or cdc) plus other documents before we can get a formal loan approval. I believe that is pretty standard. My builder has a payment schedule 5% contract signing, 25% slab, 20% frame etc... which the bank needed a copy of and they will forward payment once builder invoices us at each stage. majestic35.weebly.com Re: Lender only providing approval in principle - Need Advic 4Oct 15, 2016 8:01 am I have already submitted the signed contract with floor plan and inclusions to the bank. The builder has not provided the building permit yet because he is going to settle the land on Monday next week. Once land is settled, he would provide updated title search, building permit and domestic building insurance. Not sure of adding these to my loan application would make amy difference. Yes, I do have subject to finance clause in my contract. I have no progress payments. 5% deposit within 2 weeks, and remaining full amount on settlement at the time of completion.The deposit would stay in agent's trust account till settlement. The builder gets more money until settlement, that's why he wants to finish construction asap. I saw on other forums that banks provide formal approval about 3 months prior to settlement. My settlement is on 12 December which is less than 3 months from now. Don't know why the bank would provide only approval in principle. I am waiting for my broker to send me communication received from the bank to me. Re: Lender only providing approval in principle - Need Advic 5Oct 15, 2016 4:41 pm Ahhh yours is a different process to mine. I cant imagine they would be able to issue formal approval without building permit or the land being settled though. majestic35.weebly.com Re: Lender only providing approval in principle - Need Advic 6Oct 15, 2016 6:51 pm I'm quite confident you'd need to supply the council approved plans, builders insurance, specifications as well as your contract of sale. The bank won't do anything formal as yet because the builder doesn't even own the land let alone have started the work. Once you have all of these things I would think the bank will proceed with loan offer. If you think about it like a traditional sale, it would be the same as saying I'm settling on XYZ's house they are settling on Monday. If that makes sense. - otherwise known as Kym - Re: Lender only providing approval in principle - Need Advic 7Oct 16, 2016 9:07 am needsausername I'm quite confident you'd need to supply the council approved plans, builders insurance, specifications as well as your contract of sale. The bank won't do anything formal as yet because the builder doesn't even own the land let alone have started the work. Once you have all of these things I would think the bank will proceed with loan offer. If you think about it like a traditional sale, it would be the same as saying I'm settling on XYZ's house they are settling on Monday. If that makes sense. It does make perfect sense. And that's the reason why I have a clause in my signed contract where the vendor/builder must supply updated title search with him name as owner, domestic building insurance and building permit within 2 weeks from the date of contract. The problem is, I have two weeks as well to sort out my finance. If I can't get finance without submitting the above mentioned docs, then it is a catch 22! If the builder takes 2 weeks to give the docs to me, I would then need another 2 weeks to sort out the finance. Is it correct? 1 3143 Hi Minho I have heaps of experience in Ku-ring-gai with both DAs and CDC ( this is the main area we build in). DA's are taking 12-18months and CDC's we have been doing… 1 3293 Levelling compound Ardit is the best but buy a bag of sand and make sand dam to protect your wood floor 2 15396 |