Browse Forums Home Finance 1 Dec 22, 2009 3:18 pm Hi everyone, We are currently building at the moment and have our building loan with CBA. We are borrowing 80% of the money. My question is, when do we have to pay the 20% of the building loan? Do we pay it before construction begins, or do we pay it when the house settles? Any advice would be appreciated. Thanks Idiots are fun, that's why there is one in every village! - Dr. House - Re: When do you pay your 20% of the building loan 3Dec 22, 2009 3:31 pm We paid around $8k as deposit directly to the land vendor, and around $14k as deposit for the building contract. The rest is due at land settlement, where we contribute the remainder of our deposit and the bank contributes the rest. After that, the bank will pay all of the construction costs. Metricon Riva 33 - http://herlihy-riva.blogspot.com Site start 15/03/2010 - Handover 23/12/2010 9 months and 8 days (284 calendar days) from site start to handover Re: When do you pay your 20% of the building loan 4Dec 22, 2009 3:34 pm ritab25 The bank will not release their funds till you have contributed yours, so you will need to pay your 20% before the bank will pay anything. Really? That's what i would have thought. But i cant for the life of me remember paying the bank my 20%. Would the bank ever release funds without you paying anything? We have money in our bank account, maybe they see that the money is there and is happy to release the funds without taking anything from us yet? Thanks for your contribution!! Idiots are fun, that's why there is one in every village! - Dr. House - Re: When do you pay your 20% of the building loan 5Dec 22, 2009 5:19 pm Hi wonderland, You wouldn't pay the 20% deposit to the bank. Although the bank needs you to make your entire contribution before they will release funds you actually have to pay your contribution to the builder. Once you have paid your entire contribution you need to forward the receipts from the builder to CBA to prove that you have paid your share. CBA will then start releasing funds. Patrick O'Brien Re: When do you pay your 20% of the building loan 6Dec 22, 2009 6:37 pm mwa7876 Hi wonderland, You wouldn't pay the 20% deposit to the bank. Although the bank needs you to make your entire contribution before they will release funds you actually have to pay your contribution to the builder. Once you have paid your entire contribution you need to forward the receipts from the builder to CBA to prove that you have paid your share. CBA will then start releasing funds. That is so strange. The bank has already released two progress claims to the builder. But I'm 90% sure that I have not paid the 20%, to anyone! All i've paid is $8k to the builder when we signed the contract. I dont know why the bank has released funds already. I've asked my broker to find out for me but she wont get back to me until a few more days. Its just so strange! Idiots are fun, that's why there is one in every village! - Dr. House - Re: When do you pay your 20% of the building loan 7Dec 23, 2009 8:05 am we paid a 5% deposit for our land and on settlement had to pay the remaining 10% and the bank paid the remaining 85%. For the construction part of our loan we have already paid 5% (I think?) to the builder and provided receipts to the bank. The first progress payment will be due after the slab is laid at which time we need to pay the remaining 10% of our contribution to the construction portion of the loan- for us this will come from the FHOG which is paid to us through the bank. The bank will then contribute the remaining funds. Re: When do you pay your 20% of the building loan 8Dec 24, 2009 8:45 am CBA has two methods of funding construction loans: 1. Setting up two loan accounts. One for the land and one for construction. They do this when you are not building right away. In this situation then you will put down 20% of the land when the land loan settles and 20% of construction before CBA releases funds to the builder. Be careful as if you have their rate saver loan then they may charge you two $600 application fees! 2. One loan account for the total amount needed. They do this when construction is starting right away. In this situation you would need to contribute all of your funds at land settlement. Be aware that CBA's construction department are a complete mess at the moment. Try to give them all the docs they need in one go as soon as possible after land settlement. Expect delays with payments to the builder. It isn't CBA's fault, the increased grant has resulted in more work than they can handle. Re: When do you pay your 20% of the building loan 9Dec 24, 2009 8:58 am We only have the one loan with CBA and did not have to contribute all the funds at land settlement. I do agree with you that the construction aspect of the bank is a mess. We had major issues with them submitting our FHOG application on our behalf. I thought it had been submitted and it had except they forgot to certify something and the SRO sent it back and then the bank sat on it for 4 months. I would never have known it hadnt been submitted if I hadnt contacted the SRO for an extension of the grant since our titles and then subsequently our build start was delayed only to be told they had never received an application on our behalf. I was pretty livid and this got worse when I attempted to chase it up with the bank and they wouldnt call me back. Re: When do you pay your 20% of the building loan 10Dec 24, 2009 10:54 am jb_money Be aware that CBA's construction department are a complete mess at the moment. Try to give them all the docs they need in one go as soon as possible after land settlement. Expect delays with payments to the builder. It isn't CBA's fault, the increased grant has resulted in more work than they can handle. Actually this is the CBA's fault. I pay them enough in interest that they can afford to hire more staff to do their job. After all isnt this why we have chosen them as our bank? I dont necessarily blame the little man who works behind the desk in the branch but if I was late in making a pyment to the bank you can be sure that there is a member of staff available to notice and chase me up on it immediately. I think the same level of attention should be paid by the bank in making payments on behalf of their clients. Thats my Christmas eve rant Re: When do you pay your 20% of the building loan 11Dec 24, 2009 11:03 am The key with any lender, and especially CBA, is to not trust them to do anything right. You need to keep on top of them for everything whether it processing the FHOG, obtaining consent for a second mortgage from a guarantors lender etc. In my experience you should never just trust that they are going to do their jobs properly. They need gentle reminders! Re: When do you pay your 20% of the building loan 12Dec 24, 2009 7:16 pm We are going to put in our (balance) 20% at the last stage of payment at settlement of house build (already paid the initial 5% to builder). We are keeping the rest of our saving using it as offset for our land loan (which we aid the 20% p front). Re: When do you pay your 20% of the building loan 13Dec 28, 2009 11:45 pm Thanks everyone for your replies. I got an answer from my broker and have been told that i have actually paid for the 20% before the construction of the house started. The 20% is made up of the money that i have already paid to my builder which is 5% of our contact price, plus an extra $12k which we had to give to the bank and the rest will come from our first home owner grant Idiots are fun, that's why there is one in every village! - Dr. House - 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 19096 Hi Mofflepop, I would recommend finding a building designer to prepare plans, they should design to your specified budget. The benefit is you can tender the project out… 9 20413 Thanks mate. Yeah good points! Leaning towards Option 3 to get a bit extra space in the cabinets but not going too crazy high (and expensive). Would require a mini… 13 39696 |