Browse Forums Home Finance 1 Apr 13, 2010 9:49 pm For one of the guru's or many out there I have an issue im trying to sort but no matter what info i get it always conflicts (sorry about the wall of text) Situation: Whilst we were in the planning stage with the builder we were looking at the cost of items and they were, as most of us know, very expensive through the builder. We did alot of homework and decided that we could do things alot cheaper outside the construction and save ourselves a lot of money. Once we worked out what we could do cheaper we spoke to our broker whom advised us to get firm quotes and pay deposits. We also contacted the CBA whom had already given us pre-approval and asked them what the policy was for trying to include these extras into our construction loan. The advise we received was as long as we had proper quotes that is not a problem. We were also told if we wanted to put deposits down to lock prices in that would also be fine. Both our broker and CBA advised that once the final construction progress payment was issued the remaining funds would transfered into our account to allow us to organise the contractors to finish our house. Armed with this information we went back to the builder and removed the following: Floor coverings, Airconditioning, concreting paths and driveway, fencing, and window coverings. This removed almost 85k from our build. through Family and friends we were able to organise superior products and save nearly 15k with our extras comming in at 71k. We paid in full, the Aircon system (it has to be fitted during the build) and our tiles (the tile place could not hold them for over 3 months). before paying in full we again contacted the bank and was advised this was fine if we supplied the quote and the receipts with the loan application. After paying out 36k in deposits and the two items in full we submitted our documentation for our loan application through our broker for 80%. We were conditionally approved within minutes subject to valuation. Our valuation first came back 65k low. A couple of weeks later when we pulled ourselves out of our depressive world of hurt we managed to get another valuation that was only 30k low. We managed to get a 30k personal loan through our credit union and our loan was unconditionally approved. Our build started and all was hunky dorey until our first progress payment. apparently there was an issue with the paperwork and they would not fully fund the progress payment. After some banter between the bank and our broker the bank agreed to fully fund the progress payment but we were advised by our broker that once the builder had completed the build we would have to fund all of our extras out of our own pocket and wait for the final valuation before the bank would fund our extras. (confirming we had had our extras installed) We can not understand what the bank is trying to do. basicly we are going to have to go into further debt to pay the contractors for our extras before the bank will release the funds which is for the contractors. it does not make sense. If we had have known they would have a change to their payment policy like this we would have just paid for everything outright at the time and just given them all the paperwork. We just dont understand where the bank gets off doing this, forcing us to go into further debt to allow us to access money that is already approved for funding because they want to make sure we have the things done that we have organised. Not that we dont trust our broker but we have contacted the bank to confirm what she has told us (as we have always done) and the bank said no they will fund us if the paperwork was included with the original application. the problem is after talking to the bank we spoke to our broker whom spoke to the progress payments cell in CBA and was told unequivicly "NO it will not be funded until the additions are installed in the property after the build" So from the above we are stuffed. Unless we go further into debt to raise the funds it will take 5ish years to be able to complete these things just to access the funds included in our construction loan that is ment to pay for them. we have no idea what the true policy is and dont know where this no payment until the work is complete policy is coming from. What we have found during our building saga is that it depends on who you speak to within the cba organisation to what information you get which seems based on "their understanding" of CBA policy does anyone have any ideas? are their any Brokers out there that have seen this before feel free to pm me Rossdale Homes "Houghton" Sovereign specification Re: finance for extras outside the build 2Apr 13, 2010 10:30 pm I'm no expert, but have they done this because with your valuation coming in short, it meant that by financing the extras you would be borrowing over 80%?? I know in the past when we have borrowed under 80% for a build, the bank didn't have a problem with lending us the money for extras, but this time, because we have borrowed just under 90% and having to pay LMI, they won't fund the extra's. I don't know if I'm on the right track with that, but that's the impression I'm getting from your story, only no one has mentioned it along the way. I well and truly feel for you and I hope something works out. Re: finance for extras outside the build 3Apr 13, 2010 10:57 pm Rizzo I'm no expert, but have they done this because with your valuation coming in short, it meant that by financing the extras you would be borrowing over 80%?? I know in the past when we have borrowed under 80% for a build, the bank didn't have a problem with lending us the money for extras, but this time, because we have borrowed just under 90% and having to pay LMI, they won't fund the extra's. I don't know if I'm on the right track with that, but that's the impression I'm getting from your story, only no one has mentioned it along the way. I well and truly feel for you and I hope something works out. no .. We got a 30k personal loan for the shortfall and at the loan approval we had 22% equitity.. this is what we dont understand .. Rossdale Homes "Houghton" Sovereign specification Re: finance for extras outside the build 4Apr 14, 2010 3:22 pm oh bugger, then I have no idea sorry. I think banks just like changing their guidelines without informing us sometimes. We were approved for a 90% loan, but then when our valuation came in low and we put our own money in, they decided to only approve us for a 87% lend, and then decided we had to come up with an extra 10k for the hell of it. Re: finance for extras outside the build 5Apr 20, 2010 9:14 pm I have the same issue, i had things put into my bank loan. The way i have to do it, is the large things they will pay out if they know they will get done, like carpet. but other things like driveway i have to pay first to get done and they will re-immburst me the cost after they have come out and inspected that all things have been done. They doo this so people dont blow money on things they arent suppose to. hope this helps building heysen4e through SarahHomes at Milang IM THE PROUD OWNER OF DIRT house into council 22/08 Unconditionally approved 25/09 mortgage docs signed 29/09 land settled 09/10 land titled 22/10 start date about two weeks away!!! http://www.mymilangbuild.blogspot.com/ Re: finance for extras outside the build 6Apr 20, 2010 9:45 pm singlemum2daughters I have the same issue, i had things put into my bank loan. The way i have to do it, is the large things they will pay out if they know they will get done, like carpet. but other things like driveway i have to pay first to get done and they will re-immburst me the cost after they have come out and inspected that all things have been done. They doo this so people dont blow money on things they arent suppose to. hope this helps Thanks for your reply We have managed to negotiate for them to fund everything that is installed at handover and that should give us enough money to finish everything then get them out and fund the rest. Its quite annoying because we were told we would have the money on handover so we could pay for these things only for the rules to change down the track. it myphs me that they wont even pay by bank check to the companies. We would have paid for everything before we started if we had have known which we did with our tiles and aircon Rossdale Homes "Houghton" Sovereign specification you were just referred to get advice from your solicitor. This is a legal matter. Separately, why would you use a buyers agent for a house and land package? 3 54953 Thank you so much everyone. This all makes a lot of sense. I guess when you talk to a builder who butters up everything to look very polished, you get to start believing… 7 17198 thank you! do we need to get this or our builder before we commence new build on the block? 2 10261 |