Browse Forums Home Finance 1 Feb 20, 2009 12:44 pm Can anyone tell me please if when u go to get a loan the bank give you the funds before u intend to build or when u sign a contract?
and does the builder get the money up front or in instalements. We need cash now to pay for surveys, town planning etc. Re: Construction loan 2Feb 20, 2009 12:52 pm No the Bank will not normally release any funds until the home plans are DA approved and they have copies of contracts and Builders Risk Insurance. Then the builder is paid in stages - called progress payments - so first one is normally when the slab is poured. The builder issues you and the Bank with a request for payment and if the job is done to everyone's satisfaction then the payment is released. This happens at every stage (although not every bank will send a valuer at each and every stage).
The only time this would differ was is you owned the land outright or had other security in which case they may let you drawn down on that security basis. Some things are worth waiting for. Re: Construction loan 3Feb 20, 2009 12:55 pm kyton No the Bank will not normally release any funds until the home plans are DA approved and they have copies of contracts and Builders Risk Insurance. Then the builder is paid in stages - called progress payments - so first one is normally when the slab is poured. The builder issues you and the Bank with a request for payment and if the job is done to everyone's satisfaction then the payment is released. This happens at every stage (although not every bank will send a valuer at each and every stage). The only time this would differ was is you owned the land outright or had other security in which case they may let you drawn down on that security basis. Oh yeah, we do own the land already. Thank you Re: Construction loan 4Feb 20, 2009 12:59 pm Do you have a mortgage already? If so what percentage of the land value have you borrowed already? These factors will effect how you can structure it.
Dale. Building the Monaco 32 with Carlisle Homes Check out our blog for photos and progress reports: http://www.beigefreehouse.blogspot.com . Re: Construction loan 5Feb 20, 2009 1:00 pm and by own you mean you have 100% paid for it out of your own pocket and have no loan for it?
if so, yeah it's very easy to borrow against the equity in your land. Stevep79 & Principessa Finished building Wisdom Homes Impression 33mkII in The Ponds, Sydney http://lilypadintheponds.blogspot.com Re: Construction loan 6Feb 20, 2009 1:32 pm stevep79 and by own you mean you have 100% paid for it out of your own pocket and have no loan for it? if so, yeah it's very easy to borrow against the equity in your land. Oh good thanks, no we don't have a mortgage, its paid for, not out of my own pocket Re: Construction loan 7Feb 20, 2009 1:42 pm In that case you could ask for a line of credit loan which most bank's will lend you 80% of the valuation.
The main problem will lie in that if you need more then 80% of the value then they will release it on progress payments. (And remember this is a Bank valuation not a real estate valuation so will normally be quite harsh) Is it vacant land or a knockdown? That can be the other issue. Because if it is a knockdown and you tell the Bank that you are knocking down the old home then they can refuse to let you have the line of credit - back to the progress payment scenario again. Some things are worth waiting for. Sydney Land loan 8Feb 20, 2009 5:48 pm homemaker stevep79 and by own you mean you have 100% paid for it out of your own pocket and have no loan for it? if so, yeah it's very easy to borrow against the equity in your land. Oh good thanks, no we don't have a mortgage, its paid for, not out of my own pocket homemaker, this is a very easy loan to set up. Line of Credit or Basic low interest, the purpose and type of the loan is not the issue. If you own the land outright, this is one easy loan to do. 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 19108 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 35327 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 11927 |