Browse Forums Home Finance 1 Oct 19, 2010 10:23 pm Hello We have recently purchased some land a few months back which we are paying a mortgage for. Have gone through the whole building thing and decided to build w/ Dennis Family & apply for a construction loan w/ CBA. Our mortgage broker advised that anything extra eg. Shedding, Water Tanks, landscaping to get quotes for and submit w/ our contract w/ the construction loan. We were happy as Larry that we could include 25K of extras & have it all done in the one hit. That was until today after we signed the contracts last week w/ Dennis and visited the broker on Friday and provided everything to be told today by our broker the bank will only borrow/lend the amount for the contract of the home....no extras!! Has anyone come across this can the builder add these as a dummy quote, or any luck w/ the banks the other issue is we submitted a planning permit w/ the extras listed & paid deposits w/ the shed company & water tanks as we were advised that this will be included & the amounts of the deposits can be used to count as a deposit for the contruction loan. Help Thanks Re: Construction Loan......Help 2Oct 19, 2010 10:29 pm With the loan we are applying for (Suncorp) we could only borrow the amount for the house itself and the associated costs (ie the painting we are getting through the builder). As we are doing carpets and tiles ourselves after the build we have to save this ourselves while building or hope that the equity in the built house will be high enough to borrow against to pay for the extra's later as an increase in the mortgage. Jason Building a modified Platinum MKII with Blueprint Homes. House Plan Contracts Signed: 18/10/2010 Prestart 21/10/2010 Sandpad: 14/1/2011 Slabbed: 27/1/2011 Brickwork: 15/2/2011 Roof: 18/3/2011 Re: Construction Loan......Help 3Oct 19, 2010 10:39 pm We are building thru Burbank and we got them to include allowances in the contract for fencing & landscaping. The bank allowed us to borrow against the full price of the contract including these allowances. Building the Ascent 3000 with Burbank http://www.burbank.com.au/HouseDetails.aspx?houseId=82 viewtopic.php?f=31&t=39638 Re: Construction Loan......Help 4Oct 20, 2010 4:42 am I know the answer to this as I have done it. What you need to do is have the builder include your estimated extras amounts as PC items in the contract. Then you can get your loan and have a variation raised later for the builder to cancel the items if you "choose" for them not to do it if you catch my meaning:) Greg Re: Construction Loan......Help 5Oct 20, 2010 5:26 am Lending practices have changed in the last 12 months. The lender now reviews building contracts and does a valuation. Depending on your LVR, you will get that percentage of the "value" of the contract. Re: Construction Loan......Help 6Oct 20, 2010 7:21 am Hello Max Power I went down the dummy inclusion path with CBA. Builder put in allowances for flooring, aircon, etc. It worked to the extent that my overall construction loan was approved to a higher amount. However, when the bank recieved the progress payment schedule from the builder just before construction started, the bank noticed that the builder had credited me back the allowances. The bank's view was that these items formed part of the valuation and had to be done so I then had to run around getting quotes for these items and submit them to the bank. The quotes were higher than the builder allowances. I had to give the CBA the difference before they would release the first progress payment. I could have asked for a re-valuation but I didn't have time because the first progress payment was already overdue. Now I am nearly at handover and the CBA will not release the funds set aside for these items (including the additonal money I gave them) until all of these items are complete. So I have to come up with the funds in the interim. My advice - speak to the bank directly about this. Re: Construction Loan......Help 7Oct 20, 2010 8:39 am You could try re financing your mortgage for the block of land an borrowing on the equity gain for the land. Whenever you talk about home values generally the land goes up and the house goes down. My land is worth 25% more than what I paid for the house & land and the house has decreased in value. I know you said you've only had it a couple of months but it may be worth a shot. GLGLGL Re: Construction Loan......Help 8Oct 20, 2010 7:19 pm Hi, we got our Construction loan with Myrate and we got $40,000 at loan settlement for the things we need to spend on after handover (concreting, landscaping, blinds, furniture). They have been great. Nice, quick and easy - mostly done online. There was no problems in getting the extra $ we needed. Didn't need quotes for it either. Builder: Dennis Family Homes House: Hartley Facade: Provincial Suburb: Lyndhurst Moved in! http://cynash.blogspot.com Re: Construction Loan......Help 9Oct 22, 2010 8:15 pm MaxPower Hello We have recently purchased some land a few months back which we are paying a mortgage for. Have gone through the whole building thing and decided to build w/ Dennis Family & apply for a construction loan w/ CBA. Our mortgage broker advised that anything extra eg. Shedding, Water Tanks, landscaping to get quotes for and submit w/ our contract w/ the construction loan. We were happy as Larry that we could include 25K of extras & have it all done in the one hit. That was until today after we signed the contracts last week w/ Dennis and visited the broker on Friday and provided everything to be told today by our broker the bank will only borrow/lend the amount for the contract of the home....no extras!! Has anyone come across this can the builder add these as a dummy quote, or any luck w/ the banks the other issue is we submitted a planning permit w/ the extras listed & paid deposits w/ the shed company & water tanks as we were advised that this will be included & the amounts of the deposits can be used to count as a deposit for the contruction loan. Help Thanks YOu know what, as off last week we are going through the exact same thing only with the NAB - our builder is ready to sign but the stupid bank is holding us up. between septics, rural fences, water tanks, a/c, floor coverings etc we have $55k worth of stuff that we chose to do ourselves as our builder offered to do it + 20% which is robbery. The NAB is saying this is a form of 'owner build' which they arent too keen on. So my question is what other banks out there would have no worries with this kind of thing? Our Acreage Build The Lakeview Lodge - Beechwood Homes 01/04/10 YES 2010 - Deposit paid 23/09 - PCI CANCELLED 28/09 - PCI - will it happen.-18 months later 07/10/11 - ITS OURS..WOOHOO Re: Construction Loan......Help 10Oct 23, 2010 10:24 am Thanks for your reply's everyone they have been alot of help, what we have decided to do is submit the contract to the bank without the variations sheet this gave us an extra $15K. Dennis were nice enough to add some extras allowances eg. fencing & blinds which gave us another $10K on a new variation sheet that only the bank see's. So an extra 25K which we will get @ the end. We are hoping that as a previous posts states that when the bank does inspect the property the blinds & decking are not something that can be done until after the house is complete so should be fine there. Now in reply to acrebuild1 were are in the same boat due to the bank would only accept what was in the contract... and we had septic, electrical, tanks etc seperate quotes due to the insane markup. Which you can not build a house without a septic... we were also asked if we were owner builders. My advise go back to your builder an explain the situation so they can do what we were able to do as to what gets submitted to the bank - and what actually gets done. But be careful as to when the bank inspects the property make sure its not to obvious the exclusions. Now after speaking to the bank at the end of the build apparently if there is enough equity they will give you anything extra you need without showing quotes... which is weird surely if you add the extras @ the start that increases equity but also you have everything you need, but oh well. Re: Construction Loan......Help 11Nov 16, 2010 12:53 pm It's often the case that builders add a 'prestart selections allowance' to the building contract and credit that later directly to the client upon completion if the money isn't used. The banks don't have any issues with this either, so long as you can afford the contract value. The only exception may be someone like Keystart - but they want everything completed anyway. Re: Construction Loan......Help 12Nov 19, 2010 9:06 pm Just incase anyone wanted to know what happened in our case - commbank came through with the goods, we refinanced our investment property and land and drew on some of the equity of the investment place to give us 82k in the bank for all the things we needed (and hubbys new work car -which was 30k) so we are all very happy - inc the builder who can now get on with building the house. Our Acreage Build The Lakeview Lodge - Beechwood Homes 01/04/10 YES 2010 - Deposit paid 23/09 - PCI CANCELLED 28/09 - PCI - will it happen.-18 months later 07/10/11 - ITS OURS..WOOHOO 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 19068 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35305 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 11893 |