Browse Forums Home Finance 1 Jun 29, 2011 5:03 pm I've been fighting hard to keep my money away from the big banks and go with a credit union. However because I'm not building a new home, I own outright an old home, and I'm doing a renovation, it's been very difficult to get through to the final approval. The final builder's contract excludes P/C items, which I think is pretty standard for most renovation contracts? Things like, kitchen appliances & bathroom fittings. However, the valuers has come back to my credit union and said that, as fulfilling the contract to the letter would leave the house in an uninhabitable state, they cannot value the property. So the loan approval can't be completed. What I don't understand is that the unfinished house will still be worth more than the amount securitised. The property sales in the street go for 30 to 40% more than the amount I am borrowing. I know I can get the money quickly and easily from the major banks as I've already talked to them, and a lot more money at that (which I don't want, as I firmly believe any construction budget expands quickly to more than the money available to it!). I just have loved the service from my credit union in every other way and really, really want to stay with them. The loan itself appears to be structured for property purchasing as I've also been informed that they won't offer interest-only payments while the property is under construction. The credit union doesn't usually deal with these sort of renovation loans. Are there some magic words that I can tell my loan officer to tell the valuer which will let them complete their formal valuation of my property? I have also asked the loan officer to get from the valuer the list of items which they want to see included into the contract, then shuffle some P/A items around to bring them in. I know some P/As are very large so there should be room to accommodate. Is this an issue people doing major renovations commonly encounter? Newtown rebuild: https://forum.homeone.com.au/viewtopic.php?f=53&t=48977 Re: Valuations, Contract Exclusions and Renovation Loans 2Jun 29, 2011 5:31 pm deconst What I don't understand is that the unfinished house will still be worth more than the amount securitised. The property sales in the street go for 30 to 40% more than the amount I am borrowing. I know I can get the money quickly and easily from the major banks as I've already talked to them, and a lot more money at that (which I don't want, as I firmly believe any construction budget expands quickly to more than the money available to it!). I just have loved the service from my credit union in every other way and really, really want to stay with them. Unfinished houses are a real problem for banks and credit unions as they are very hard to sell. no one wants to buy someone elses half built dream. You often see unfinished ghost houses on developments that stay empty for years. See Link http://www.anewhouse.com.au/?p=510 The Harder You Try - the Luckier You Get ! Web site http://www.anewhouse.com.au Informative, Amusing, and Opinionated Blog - Over 600 posts on all aspects of building a new house. Re: Valuations, Contract Exclusions and Renovation Loans 3Jun 29, 2011 5:31 pm The reason banks have an issue with this is that a property that is partially built is very difficult to sell, and can often sell for much less than the expected value. Many of the bank staff may have told you that this is not a problem, however they are not the credit managers making the final decision and trust me this will be a problem when it goes to the credit department. No bank wants a partially complete house. You have several options here. You could just get the builder to include an allowance for this work in his contract and then you could work it out between yourselves. Messy, and far from ideal. You can get quotes for the additional work to be done yourself and present these to the credit union to pass onto the valuer. This is fine if the work is small. If you are owner building part of it yourself then you may need to apply for owner builder finance. This is more complicated, and if the amount of work you are doing is small it is better just to get your builder to do it in his contract and then sub contract to him. Your loan officer just has to work out the best way to present this to credit, and work with you to meet the lender's policies. There is a way, it just isn't as straightforward. Banks / credit unions don't work well with anything "outside of the box"! Re: Valuations, Contract Exclusions and Renovation Loans 4Jun 30, 2011 10:18 pm Well, the exclusions are just "Kitchen, Bathroom and Laundry fittings," and tiles & light fittings. The kitchen allowance is $15,000 for a small terrace house, which is fine for a ceaserstone nothing-fancy piece. I am thinking of reducing that to $8,000, and putting the kitchen, bathroom & laundry fittings as a P/A item for $7,000. A bit of a nip, bit of a tuck, should be good to go. I'll report how my loan officer feels. I have a great working relationship with my builder and he's been more than happy to accommodate what I need to get done to get the loan. Newtown rebuild: https://forum.homeone.com.au/viewtopic.php?f=53&t=48977 Re: Valuations, Contract Exclusions and Renovation Loans 5Oct 24, 2011 11:57 am Help please, I am going to settle my land in 1st of Nov and I bought it through real estate agent. Couple of weeks back, I went to land and saw huge dirt (like mountain of soil) and pegs missing in the land. I told agent and vender to remove all dirt and need pegs to be in correct position before the settlement date. But it seems like there not going to do anything for that. What can I do? Any legal advice please.. Thanks in Advanced, Nicole1983 Nicole1983 Re: Valuations, Contract Exclusions and Renovation Loans 6Oct 24, 2011 12:41 pm Nicole - you might want to get a Mod to move this into the General Discussion section for more answers - at the moment it is in Home Finance. Some things are worth waiting for. Re: Valuations, Contract Exclusions and Renovation Loans 7Oct 25, 2011 7:11 am Nicole1983 Help please, I am going to settle my land in 1st of Nov and I bought it through real estate agent. Couple of weeks back, I went to land and saw huge dirt (like mountain of soil) and pegs missing in the land. I told agent and vender to remove all dirt and need pegs to be in correct position before the settlement date. But it seems like there not going to do anything for that. What can I do? Any legal advice please.. Thanks in Advanced, Nicole1983 Nicole If you have not settled yet then the issue of of dirt/pegs is clearly one for the vendor to address. A simple solution may be to tell the agent that you will not settle until the issues are fixed remembering that real estae agents only get paid when a property is settled. I also suggest that you get your solicitor who is handling the purchase to send a note to the vendor's lawyers to cover yourself legally. Re: Valuations, Contract Exclusions and Renovation Loans 8Jan 11, 2012 2:41 pm Thanks Mike and Kyton. Nicole1983 I recently went through a similar renovation and move scenario when updating our family home. 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