Browse Forums Home Finance 1 Mar 01, 2011 2:22 pm I was wondering whether any of the banking boffins out there could tell me if this is standard practice amongst lending institutions now. We are in the process of trying to get a construction loan for a house that we are having built through a builder in Melbourne. We were intending to do the painting and tiling ourselves however but have been told by our credit union that our builder wouldn't receive his final payment unless we had finished all the tiling and painting. I can't imagine a builder would be content to sit about and wait for his final payment when he has finished all the contracted works for the house so how did people, who have done their own tiling and painting, get around this? Or is this part of the new stricter guidelines for home loans? Any advice would be appreciated. Re: Tiling and painting affecting loan 2Mar 01, 2011 2:38 pm Are you classifying this as an owner builder? Re: Tiling and painting affecting loan 4Mar 01, 2011 2:45 pm Bank probably does not see the distinction unless the painting and tiling is not included in the contract. Re: Tiling and painting affecting loan 6Mar 05, 2011 8:49 am we did our own titling and painting on our house when we build a few years ago and had no problems with final payment etc but it was only a small loan as we already owned the land finished building 40 square home on 5 acres with perry homes.working on the landscaping just finished pool deck with ://forum.homeone.com.au/viewtopic.php?f=31&t=2217 Re: Tiling and painting affecting loan 8Mar 05, 2011 11:53 am ^^ it depends though if it's put through in the valuation and affects the loan. We did our painting, flooring, concreting after handover, but it was out of our own money so the bank had no problems with it, and it wasn't included in our valuation for our loan. If we had of given the quotes to our bank for valuation and/or to include in the loan, then we would've had to have all that done before the bank gave the builder the final payment, which is why we chose to pay it ourselves. Re: Tiling and painting affecting loan 9Mar 05, 2011 2:26 pm Thanks for all the replies folks; I really appreciate it. Unfortunately I'm now even more confused because a) we own the land and we have a LVR of 47%. b) We are doing the tiling and painting with our own labour hence not included in loan and paying for materials out of our own pocket, hence not included in the loan. The loan is only for the work done by the builder. I have the feeling that this is something to do with changed conditions of loan after the new regulations came in on January 1st. Just one other question, for those who did their own tiling - did you find it difficult to work around the builder eg. in the bathroom having to do tiling before the plumbing fixtures can be put in? Appreciate all the replies. Re: Tiling and painting affecting loan 10Mar 05, 2011 3:32 pm Well that is really odd then. If it's coming out of your own pocket after the build, then it shouldn't have anything to do when you builder gets paid. Unless it's something to do with the bathrooms not being able to be used until it's done and therefore not "liveable"?? Not that I can see how that would affect it. Maybe the credit union thinks it's being included in the loan and have their wires crossed? Re: Tiling and painting affecting loan 11Mar 05, 2011 5:18 pm The reasons the bank manager gave were "nobody does their own painting and tiling anymore" and "the bank is lending you money based on the finished value of the house. If the house is not painted and tiled, it's not finished and so it doesn't have the value ascribed to it for the loan". Re: Tiling and painting affecting loan 12Mar 05, 2011 7:02 pm That sounds like crap. My house was valued without floors, painting, driveway, concrete etc as all that was being done by us. They had no idea what we were putting in the house, so couldn't value it accordingly. The bank is lending you money based on what they are loaning for. Maybe ask them to revalue without those things added. You have plenty of equity so shouldn't really matter! Re: Tiling and painting affecting loan 14Mar 06, 2011 12:38 pm our house to was valued without carpet and tiling and no painting either and there was no problem with final payment,as these items were not noted on the contract from the builder they were noted as after hand over the bank had no problems as long what they had paided for was done and as long as it valued at the amount they were lending us which was only a small loan so there were no problems there at all.But of course all banks are different and some laws have changes since we build finished building 40 square home on 5 acres with perry homes.working on the landscaping just finished pool deck with ://forum.homeone.com.au/viewtopic.php?f=31&t=2217 Re: Tiling and painting affecting loan 15Mar 08, 2011 3:22 pm I think that 'bank manager' is not up to scratch on what happens in the real world. Our bank gave us money for an unfinished house - no paint/carpet/tiles. They only paid for the house and nothing towards the finishing items. I'm guessing you/partner is a professional tiler? When you do your contract you nominate a tiler, or anytrade, and they'll just book you in as they normally would. Re: Tiling and painting affecting loan 16Mar 08, 2011 10:56 pm I agree. We are doing the tiling, carpet and driveway after handover. Initially included it in the contract for the loan approval. Then gave bank post contract variation and advised that it was all still being done but after handover as would be cheaper. Bank had no problem keeping the loan amount the same (60% LVR) as the finished house value once carpet, tiling and driveway is done would be the same as that of the initial builders contract and they have no problems making the appropriate payments to the builder to enable handover. I think definitely talk to the bank manager as I think he may be confused. Re: Tiling and painting affecting loan 17Mar 09, 2011 8:11 am Thanks dragonflychic and crawley. I will definitely be talking to the bank manager and perhaps to another bank! Unfortunately I did find the following on another thread on Homeone which would seem to indicate that banks don't have to be accommodating: "Banks want to make sure that you complete the home, otherwise it isn't very good for them from a security point of view. To reduce their risk they make sure that you have enough funds to complete the project, including the flooring and anything else not included in the building contract. Be careful as what your bank may not tell you, as often bank managers don't understand the construction process, is that the bank will likely withhold the final payment to your builder until your floor is complete as well. This can cause a lot of problems if your builder completes his work and wants payment however the flooring people have a delay and can't complete the floors quickly. Discuss this with your bank to confirm how they will manage these payments, and if possible book in your flooring people quickly so that there will be no delays with payment to your builder." Oh and by the way dragonflychic, neither of us is a professional tiler. Maybe that's why the bank is nervous! Re: Tiling and painting affecting loan 18Mar 09, 2011 9:29 am Liliana Thanks dragonflychic and crawley. I will definitely be talking to the bank manager and perhaps to another bank! Unfortunately I did find the following on another thread on Homeone which would seem to indicate that banks don't have to be accommodating: "Banks want to make sure that you complete the home, otherwise it isn't very good for them from a security point of view. To reduce their risk they make sure that you have enough funds to complete the project, including the flooring and anything else not included in the building contract. Be careful as what your bank may not tell you, as often bank managers don't understand the construction process, is that the bank will likely withhold the final payment to your builder until your floor is complete as well. This can cause a lot of problems if your builder completes his work and wants payment however the flooring people have a delay and can't complete the floors quickly. Discuss this with your bank to confirm how they will manage these payments, and if possible book in your flooring people quickly so that there will be no delays with payment to your builder." Oh and by the way dragonflychic, neither of us is a professional tiler. Maybe that's why the bank is nervous! We went with one of the big 4 and they honestly couldn't have cared whether we had flooring etc done or if we could afford it. As long as the house is habbitable, ie, usable kitchen, bathrooms etc, then in my experience as long as it's not included in the loan, the final payment isn't a problem. A friend of mine is in her house a year on and has no floors, paint and yards, but that didn't bother the banks. I think the above comment is more for if your getting floors included in your loan or have used quotes for flooring and given them to the bank to do the valuation. 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 19114 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 35332 Looking to tile the facade pillars rather than rendering. Builder is quoting 2500$ laying cost for upto 10msq. The 2 pillars come to be 16msq. So laying costs are 5000$… 0 7554 |