Browse Forums Home Finance 1 Mar 17, 2010 10:11 pm We've run into an interesting situation. Like (it would seem) many builders, ours fairly recently started requesting that we sign the contract before the building approval, soil test. etc. process had begun. I assume this is because the costs that come up at the approval stage can be quite large and some people had probably been pulling out altogether and refusing to pay any costs already incurred by the builder. Anyway, a cool $40000 was added on to the contract price during the approval process, and now the broker is saying that the bank will be confused that the contract cover page payment schedule needs to be adjusted by $40000, despite the relevant signed ocuments and figures and contract clauses having been provided to them. As if that's not enough, the Home Warranty Insurance is issued at the contract price, not the current price with variations, which is also apparently going to confuse the bank. Has anyone been in a similar situation, and if so, how did you end up organising things with the bank? James. Re: How to get a loan for contract + variations? 2Mar 18, 2010 12:09 am Hi James Whatever your Contract Price is, this should be your bank's only concern. If that amount is what you are borrowing, that should be ok, but if you think you can add your variations into the loan, I doubt the bank will allow it. If you are paying for the variations separately, the final statement will show how it all adds up, it will have the extra amount added in on paper, but you can manually adjust that figure when telling the bank you approve to pay the final payment. The Indemnity Insurance (home warranty) will have the contract price as the amount, this is correct. It shouldn't confuse the bank. Hope that made some sense Built with New Generation (Summit Homes) We own land!... with a slab on it! Plus a shell of a house with stuff inside ! Re: How to get a loan for contract + variations? 3Mar 18, 2010 1:07 am Couple of things to determine: 1. If the bank has given you the maximum available loan which your contract price was built upon, then adding 40k will not be something they will allow 2. If not, then you could renegotiate with them to add this sum to your borrowings 3. The builder may require (ours does) any additional variation cost over a certain amount (ours was 20k) to be added to the contract sum so that they receive the money in stages rather than at the end - this will confuse the bank and depending upon the answer to 1. could land you in some trouble - ie if you are at max borrowings and the bank realised you had put another 40k on the contract they would want you to pay this before you draw down any of your borrowings from them. We are with Westpac and this was clearly stated to us contractually. 4. That said, any variations post signing the loan contracts (again, in our situation) we can add to the final bill and settle directly with builder rather than pay in stages If I were you I would think carefully about what is happening - my concern would be that rather than confuse the bank you would make them ask more questions and dig deeper and if the answer to 1. was Yes, then you could run into some difficulty. The banks are getting a bit better but risk is still top of the agenda and depending upon the risk you present them in lending, this situation could make them reassess things, which is not something you want them to do at this stage!! Hope it works out for you Re: How to get a loan for contract + variations? 4Mar 18, 2010 7:10 am Thanks for the replies. To clarify a few things, (i) this is the first loan application, we are not trying to get an existing loan increased based on the original contract increased (ii) the total amount contract + variations is well within what the bank are prepared to lend to us (based on the pre approval amount). So the basic problem is how to organise the application so that the bank immediately lends the contract + variation amount, not just the contract amount. Re: How to get a loan for contract + variations? 5Mar 28, 2010 11:51 pm That's what your broker is supposed to know! You're paying them a lot (it comes out of what you pay the bank) so they will do these things for you. All I did was provide signed variations to my broker and she made it happen. The variations added up to quite a lot as we did our selections after contract signing. 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: How to get a loan for contract + variations? 6Mar 29, 2010 12:03 am Our preapproval was 11 k short, and then our site costs were an extra ten on top of the 15k worst case scenario. I don't want to be negative but just be aware that the final loan amount can change as ours did, which would be a huge problem for us if we didn't have any savings ~*~Moved in on the 16th April 2011~*~ Re: How to get a loan for contract + variations? 7Mar 30, 2010 10:04 pm I can understand your situation JHX, when you sign a contract before the soil tests and surveys are done, you'd have no idea what the final costs for siteworks would be. For us, we plan to get our builder to include a generous sitecost allowance, so that we can provide all these to the bank for inclusion in the loan. We were also advised that if we included all our variations into the contract PRIOR to signing them, that when we request for loan these will be included into the loan as well. I suppose if we went to prestart and get carried away with the fittings etc, then those additional costs would not be included into the loan. Our broker also advised us that Suncorp will allow us to include the costs for installing airconditioning into the loan, which will be installed by a third party after handover....not via the builder. We only need to provide a copy of the quotation. I hope our broker knows what he's talking about. 12 March 2010 - Land titles received 3 April 2010 - Signed building contract 14 April 2010 - Prestart 28 April 2010 - Loan approved 30 June 2010 - Slab completed 27 August 2010 - Brickwork completed 22 September 2010 - Roofing completed 30 September 2010 - Internal walls plastered 12 October 2010 - Lock Up 19 November 2010 - PCI 26 November 2010 - Handover 29 December 2010 - Moved In https://forum.homeone.com.au/viewtopic.php?f=31&t=32584 Re: How to get a loan for contract + variations? 8Mar 31, 2010 10:45 pm OK, quick update: the broker got us to get an updated HOW insurance certificate, and a carefully-worded letter from the builder once again explaining how to calculate the progress payments. This may have been overkill, but in any case 5 days later (today) we heard that the bank would approve the loan. I'm not sure how necessary the extra paperwork was, because the assessor simply left the completely unrelated preapproval amount in the document instead of the contract + variation amount that we had agonised over for so long! Oh well. Perhaps when they are drawing up the loan contract they will be a bit more attentive... Re: How to get a loan for contract + variations? 9Apr 02, 2010 10:49 am This makes me very worried since our builder only charged us 6000 for site costs. What has been the general site costs people have had to pay?? VICTORY 1800, EN-SUITE, DOUBLE GARAGE, FAMILY ROOM AND ALFRESCO Land Settled: 20 July 2010 Site Scrap: 30 August 2010 Slab Pour: 20 September 2010 Frame Complete: 23 September 2010 Fascia and Gutters: 28 September 2010 Roof Complete: 06 October 2010 Lock-up complete: 28 October 2010 Plaster complete: 29 October 2010 Fix-out complete: 22 Nov 2010 PCI 7 FEBRUARY 2011 Re: How to get a loan for contract + variations? 10Apr 02, 2010 11:47 am Pepto471 This makes me very worried since our builder only charged us 6000 for site costs. What has been the general site costs people have had to pay?? If that's all you've ended up paying then that's great for you! Anyway, you'll get a much more detailed answer by searching in the Building a New Home forum. I would have expected $10000-$20000 for site costs for the most favourable types of blocks (flat, good soil). Re: How to get a loan for contract + variations? 11Apr 02, 2010 12:09 pm jxh Pepto471 This makes me very worried since our builder only charged us 6000 for site costs. What has been the general site costs people have had to pay?? If that's all you've ended up paying then that's great for you! Anyway, you'll get a much more detailed answer by searching in the Building a New Home forum. I would have expected $10000-$20000 for site costs for the most favourable types of blocks (flat, good soil). the 6000 was just the estimate in the building contract. They are due to do soil tests in a couple of weeks. That's when they will give the final figure I suppose. VICTORY 1800, EN-SUITE, DOUBLE GARAGE, FAMILY ROOM AND ALFRESCO Land Settled: 20 July 2010 Site Scrap: 30 August 2010 Slab Pour: 20 September 2010 Frame Complete: 23 September 2010 Fascia and Gutters: 28 September 2010 Roof Complete: 06 October 2010 Lock-up complete: 28 October 2010 Plaster complete: 29 October 2010 Fix-out complete: 22 Nov 2010 PCI 7 FEBRUARY 2011 It seems very clear to me that your contract states that a security account does NOT need to be established so the answer to the builder is NO. If in doubt find a contract… 1 8559 So AFAIk the outcomes of the BAL ratings form part of a clause that allows them to pass these costs on to you. However the more relevant detail is how did it go from 19… 1 9680 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 19254 |