Confused about allowances and bank loans

Silvergum · Apr 01, 2012 2:54 pm

Hi All
Just wanting some clarification... we have just our loan approved through cba for construction...
We have a $17k allowance for flooring as we wanted to pick our own carpet and floorboards.
Our broker advised that we would need to complete prior to bank lending us the money. This doesnt make sense as if I had the money to do it I wouldnt borrow it.
It was included in the building contract which went to the bank. It states that the flooring will be done after handover.
Any recent experiences?
Thanks

Marcoola32 · Apr 02, 2012 2:21 pm

Hi Silvergum
We have recently had a similar experience - If you read the post in the Finance forum titled 'Quotes required for mortgage on a new build' you will see a few posts which may be of help. Basically our broker put a note on the loan application to say that we will be doing our floor coverings / driveway etc after handover and as such the final payment will need to be made to the builder and then another 3 or 4 payments will need to be made to driveway guy / flooring people etc. I hope that makes some sense - it was hard for us to understand too - I would try speaking with your broker and ask them to explain further - our broker was all too happy to explain how it works a number of times until we understood how it all works - confusing stuff!
Em

shape · Apr 03, 2012 2:26 am

That doesn't seem right, CBA is happy to accept valuation value and payment based on "future" improvement / value adding -- thats the whole point of constructions loans....it just require the broker to write up a few notes and send in the quotes...

What your broker is telling you to do is, do the work first then get CBA valuers to redo the valuation with the new work in place...hoping it give you a higher value...which is just a lazy and slack way around the CBA policy.....

Regards
Michael