Browse Forums Home Finance 1 Dec 09, 2009 11:26 am We are in a fix as our home loan provider would only provide 80% on what’s specified on the tender by the builder. The builder will put only what he will provide on the tender. So the items like flooring, flyscreen, fencing, driveway, landscaping etc will have to paid out of our own pocket. This amounts to $40,000-$50,000 easily. We tried convincing our builder to add these components into the tender even if they are not supplying the item but they won't budge. The home loan provider will not consider a quote/invoice on any of these items under construction loan. Any suggestions how we get loan on these items and include it in the construction loan !!?? !! Re: In a fix --- Tender and loan amount ! 2Dec 09, 2009 11:51 am hello, Can you let us know who the lender is please so that I can look into that institution specifically for you. In general, the construction contract plus quotes for all of these works are accepted up front by most lenders. So that they can send all of the quotes to the valuers for correct valuation. A lending institution would normally want to see these extra items anyway as they form part of the security being constructed. And as far as the construction contract goes. It would seem that it is at current missing the flooring, fences, driveway and landscaping etc. Which all add value. It does not seem the 'norm' what your lender is doing. This is why I would need to know who you are lending through to confirm these. Have you already started construction? As the variations/additions you are seeking need to be assessed by the valuer at the start of the lending. Are you planning on carrying out these works yourself? or will these works be completed by tradespeople? Is there any particular reason why you have not commissioned the same building company that is doing the rest of the construction to do these extra items? or to subcontract these items? This info will all help towards being able to provide some information to you. Regards, Trent Davidson Property Finance Consultant Residential Lending LJ Hooker Finance Brisbane North Credit Representative Number: 387283 under Australian Credit Licence:380270 Re: In a fix --- Tender and loan amount ! 3Dec 09, 2009 11:58 am sorry, i don't have any advice, but it all confuses me. Our bank said that they wouldn't take these extras into consideration unless we were borrowing less than 80% of the loan, then they would lend for these extras. They won't even lend for the variations, even though they now form part of the progress payments and variation to the contract. They will only go on the original contract price. I understand the above, but they told me they only get the land valued, and add that to the price of the contract and lend according to that, so our loan is going to be decided purely on what our land comes back at. Re: In a fix --- Tender and loan amount ! 4Dec 09, 2009 12:15 pm A house on a block of land without flooring, fencing, driveways etc. Is just that. A shell on a block of land. Not necessarily a great security for a bank to have. The extra items need to be submitted WITH the original application, and it be pointed out that the valuation needs to be done with the contract and the extra quotes as part of it, plus the land on top of that. If ALL the quotes are not submitted at the time of application and valued accordingly then the room for these to be included in the 80% is not enough. Land = $200,000.00 Construct = $120,000.00 Extras = $35,000.00 Total security value should equal land plus construction items. = $355,000.00 80% = $284,000.00 All these items HAVE to be submitted prior to valuation however, AND it needs to be requested that these are valued as part of the build. With payment from the lenders this is usually done at final payment (you will need to make sure that this is ok with your tradies) as these items are not included in the schedule of payment that the builder has done for you. It really does depend on the lending institution that you are working with. In some cases you may just need to wait until construction is completed as per the construction contract. And return to the bank for a topup or addloan to increase the lending to cover the extra items AFTER the builder has locked up his work. As it 'could' be expected that the market value of the property is greater than that of the land plus construction cost. Regards, Trent Davidson Property Finance Consultant Residential Lending LJ Hooker Finance Brisbane North Credit Representative Number: 387283 under Australian Credit Licence:380270 Re: In a fix --- Tender and loan amount ! 5Dec 09, 2009 1:21 pm Thanks for your response Trent. We are with CBA and although they being the biggest home loan provider in Australia, dont seem to be very flexible when it comes to construction loan. Most the items that I mentioned earlier, flooring, fences, driveway and landscaping etc are not supported by the builder and hence they dont want to include it in their tender. Fair enough I suppose..We will have to get external parties to do these jobs. The bank wants to make the progress payments to only one vendor (builder in this case who has issued a contract) rather than making payments to multiple vendors and avoid confusion and paper work. Again makes sense... But this doesnt solve our problem. We want to get an approval for the loan for total estimated construction before the construction begins. Re: In a fix --- Tender and loan amount ! 6Dec 09, 2009 9:16 pm Hi Depending on bank policy and lending criteria, some banks will lend between 80% to 110% depending on financial situation. If you have equity and the capacity to for repayments you can borrow the whole lot. In this case it would be two loans, land and construct loan and a equity loan to pay for the additionals. I built an investment property a while ago, the bank would give me 80% of the total price for land, construction and additionals, the other 20% was funded by a equity loan Hope this helps Shane Re: In a fix --- Tender and loan amount ! 7Dec 10, 2009 9:33 am Rupz. Your broker or Lender needs to frame it the right way. If need be submit it to credit to include the extra quotes and then have the valuer value the property land plus construction contract plus the invoices. This is the ONLY way to get these sort of things done. If it hasnt been set up to include these right from the start then the lending institution will not want to do it this way. Have you broker speak with their Business Development Manager re this. If you are using a branch lender have them speak to their Regional Manager about this. Regards, Trent Davidson Property Finance Consultant Residential Lending LJ Hooker Finance Brisbane North Credit Representative Number: 387283 under Australian Credit Licence:380270 OK, The orange lines on bricks are where I can see cracking to the motar joints, but further up you can also see cracking through brick work. it takes a lot of stress to… 6 1525 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 18894 I recently went through a similar renovation and move scenario when updating our family home. 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