Browse Forums Home Finance 1 Mar 10, 2015 2:12 pm Hi Can someone advise what is (generally) required for a construction loan. Waiting to hear back from the lender I normally enquire with. I may give up and just phone the call centre. My query relates specifically to the kitchen and other items. For the build itself do I need - a tender - A fixed price contract (assume is the latter? Or can they do a pre approval based on the tender? I already have a mortgage for the land with CBA and will roll it up together). I have a custom build and plan to leave off the contract items including - Air con, driveway, landscaping (all pretty usual) - But also kitchen – will I need a quote for the kitchen to have this amount included in the loan? A contract?- Do I need quotes for all the other items to have this included. The banks I am looking at, for various reasons at this time are CBA and ING. Re: Construction loan query - docs for items outside contrac 2Mar 10, 2015 2:15 pm Hi Leksie - good to see its progressing! You will definitely need the kitchen quote - interesting you're leaving it out, hope that works with the lender - I think it could post valuation issues. The fixed price tender is ok, it will need to be confirmed with the final build contract in due course, again thats ok. I would give them quotes for absolutely everything you intend to do as it can then be included in the valuation. Bec Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Construction loan query - docs for items outside contrac 3Mar 11, 2015 8:35 am becjarrettdalton Hi Leksie - good to see its progressing! You will definitely need the kitchen quote - interesting you're leaving it out, hope that works with the lender - I think it could post valuation issues. The fixed price tender is ok, it will need to be confirmed with the final build contract in due course, again thats ok. I would give them quotes for absolutely everything you intend to do as it can then be included in the valuation. Bec Thank you. Yes that way we get a better valuation I guess and also have access to funds we may need. ING suggested it is ok as long as we provide a quote, I haven't spoken with CBA our current bank yet. I've probably asked this before.. do they generally do land + construction cost for valuation or is it more sophisticated than that? I've heard various things on various forums. Anyway, it doesn't matter it will be what it will be. Yes we lodged our DA last week And just waiting for the tenders to come back. On leaving it out, I'm not sure we have tendered to 4 good quality master builders in our area. Generally what they say is they are happy to place the kitchen in contract, but all they will do is pay the kitchen place and add a margin. I guess it avoids them having the responsibility for the kitchen (?!).. hopefully that is ok, and also makes it less expensive than us. So we can choose whichever cabinet maker we like. Not sure, seems to be common practice amongst some of the custom builders. Re: Construction loan query - docs for items outside contrac 4Mar 11, 2015 9:09 am Ahhh custom builder you're right - thats how they will operate. Much easier for them to get the quote from your preferred mob & put it in the contract and then its also them dealing with any potential warranty issues and no finger pointing (that was their responsibility). Yes thats the way most valuations are done, land value + hard costs. Most, not all, but ING and CBA are ok with theirs. Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Construction loan query - docs for items outside contrac 5Mar 12, 2015 9:01 am becjarrettdalton Ahhh custom builder you're right - thats how they will operate. Much easier for them to get the quote from your preferred mob & put it in the contract and then its also them dealing with any potential warranty issues and no finger pointing (that was their responsibility). Yes thats the way most valuations are done, land value + hard costs. Most, not all, but ING and CBA are ok with theirs. Yeah that's what they said, well they can even leave it out and we contract with the kitchen place direct though they will put it in if you ask, keeps them off warranty etc. But it suits me anyway I can have whatever I want then. Thanks for your help. I wonder if CBA will review their land val again or not (was completed in October when we bought out the rest of the equity in the block) Re: Construction loan query - docs for items outside contrac 6Mar 12, 2015 11:11 am Yes they will, the valuation will have expired and also its now a "to be erected" valuation. Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Construction loan query - docs for items outside contrac 8Mar 25, 2015 11:43 am becjarrettdalton Ahhh custom builder you're right - thats how they will operate. Much easier for them to get the quote from your preferred mob & put it in the contract and then its also them dealing with any potential warranty issues and no finger pointing (that was their responsibility). Yes thats the way most valuations are done, land value + hard costs. Most, not all, but ING and CBA are ok with theirs. Yeah so one builder is telling us generally the bank is ok with it just being a quote but maybe those people were funding those items out of cash? As CBA is saying it definitely needs to be in the contract in one form or another, but the builder just asked to double check whether they will accept a quote. I guess it is to do with warranty and insurance. I guess our best bet is to get the quote from the kitchen place and ask the builder to put in the contract as a variation? They will then have to add a premium to it though as the progress payments will pass through the builder to the kitchen place? I'm wondering if there is another way around it.. I guess we can't do a top up on our existing loan since we haven't constructed anything yet. You are right probably best speak with a broker. Re: Construction loan query - docs for items outside contrac 9Mar 25, 2015 11:52 am Its more about the bank being unable to hold a security that doesn't have a kitchen, and being unable to force you to use the money to put a kitchen in. We all know you're going to, but, what if you don't? Ring Craig - He'll get it sorted Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building 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 18896 The best advice is for you to get a competent building consultant to guide you through your build 7 4664 There is no reason why building contract reconciliation cannot be done prior to handover, if the builder won't do it get someone to do it for you. Why would you pay for… 3 6680 |