Sep 18, 2009 6:46 pm
We received pre-approval for our construction loan a month or so ago. The loan represents 90% of the cost of the house build.
Following pre-approval we signed the contract to build and at the same time paid 5% of the contract value as deposit to the builder.
We've now received final approval and will be signing the loan offer next week.
My question is this:
What will happen to the 5% cash we have already paid to the builder?
1/ Will the bank reduce our home loan by this amount?
2/ Will the bank reimburse us once building commences?
3/ Will the builder just draw down the cost of the construction LESS the deposit paid, in stage payments over the course of the loan, meaning that will have some 'leftover' at the end?
I'm just worried that the cash we'd sort of hoped to keep to one side to pay for finishing (turf, electricals etc) has now gone.
Having not done this before, I'm a little confused as you can probably tell!
Re: Construction Loans & Stage Payments2
Sep 18, 2009 7:54 pm
It will be #3 it will either come off the first or the last payment
Re: Construction Loans & Stage Payments3
Sep 18, 2009 8:03 pm
If you have already signed your loan contract and the build price is less when finished than you have borrowed, at completion you get the leftover funds. It is a good idea this way as firstly it covers any variations or pays for things like driveways, clothelines etc.
Built a Henley Verve Circa VK1
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becjarrettdaltonInterest Only Payments end after construction?Interest Only Payments end after construction?
You know you're allowed to pay extra, and any extra you pay comes off principal...if that helps. If you're wanting to start sooner