Browse Forums Home Finance 1 Oct 06, 2015 10:11 am I've emailed my mortgage broker about this but hes on holiday so here goes. Our land is settled and ready to build on. We paid a builder a $3000 deposit and hes done nothing but muck us around with no end in sight so we have signed with someone else this weekend. We may get some of the $3000 back, highly unlikely but its a small price to pay for the stress relief we are enjoying already. I'm going to have to inform them today. Anyway the bank is lending us a certain amount but require $53000 of our own money which I've been told will be used first before the bank starts contributing its share. My question, do we need to keep reapplying for our loan every 3 months through this whole process until our $53,000 is exhausted and the bank starts paying from its funds? If we do, then what happens if we've paid $53,000 have a semi-completed house and the bank decides its not going to approve the loan anymore (worse case scenerio). Or, now that we have paid a $1500 deposit has that locked the loan in place so we no longer need to reapply? We need to reapply now then maybe as many as 2 times more before we get to the stage where the bank starts to use its own funds. Also while we are still using our $53,000 do we pay the bills the builder will present us with or do these still go to the bank and they dip into our account to pay them with? Thanks in advance? Re: Do We Need To Keep Reapplying? 2Oct 06, 2015 10:18 am Hello 1st timers. We had to pay 20% of our construction as well. When the first couple of invoices came in, the bank just told us to pay it with the deposit money. Didn't need to reapply at all. When it got to the stage where bank had to pay the invoice, there was still a part of the deposit left that we still had to pay, so they just took that out of our account. So I'm going to guess that you don't have to reapply? Its very unlikely anyway, but I don't know what your bank is like. Re: Do We Need To Keep Reapplying? 3Oct 06, 2015 10:41 am Nope, once you have your full approval (as long as nothing in the build contract changes and even this is within reason) then you have your approval & its full steam ahead. Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building Re: Do We Need To Keep Reapplying? 4Oct 06, 2015 10:54 pm Once you submit the appropriate documents to the bank and they give you unconditional approval as per Rebecca's comment above it is all good going forward. The one loan covers you for the whole project. What normally happens is that the builder will invoice you in 5 or so stages after completing some work. When they send you the invoice you pass it on to the bank along with a progress payment form, and the bank will pay the builder. The difference here is that the bank likes to see some hurt money from you in the form of $53,000 and will ask it to be paid first via the invoices before they start paying their share. Cheers Tom Re: Do We Need To Keep Reapplying? 5Oct 07, 2015 8:09 pm Just heard back from the mortgage brokers office. Apparently we don't need to reapply until early January. Hopefully by then the building will be underway and we won't need to reapply at all. Re: Do We Need To Keep Reapplying? 6Oct 08, 2015 10:51 pm 1st-timers Just heard back from the mortgage brokers office. Apparently we don't need to reapply until early January. Hopefully by then the building will be underway and we won't need to reapply at all. If you have unconditional approval, why would you need to reapply in Jan if that was the case? Cheers Tom Re: Do We Need To Keep Reapplying? 7Oct 09, 2015 7:51 am plc 1st-timers Just heard back from the mortgage brokers office. Apparently we don't need to reapply until early January. Hopefully by then the building will be underway and we won't need to reapply at all. If you have unconditional approval, why would you need to reapply in Jan if that was the case? Cheers Tom The loan for the land is unconditional and we are paying for that already but we haven't drawn down any of the construction loan yet or presented a plan to the bank for valuation so until any of that happens I persume it hasn't gone unconditional. Things are quite a bit different over here than they are where I come from so we just do what our mortgage broker tells us but even then hes not always very clear on the procedure. Re: Do We Need To Keep Reapplying? 8Oct 09, 2015 8:58 am so you have two loans, one for the land and one for the construction? if so then your broker is right, because even if you have unconditional, its only valid for a period of time before the bank deems it necessary to reasses your finances to ensure everything is still the same. However if you draw down before then, youre cooking with gas. IF the land and the construction are on the SAME loan, you shouldnt have to reapply, but based on what im hearing, given you still have cash im presuming you have two loans. Having two loans like that can be quite risky because your land might be paid for, but if something changes in your circumstances and the build is delayed, the bank could reject the application and then youre left with an empty block. A lot of estate covenants stipulate you must start the construction within a certain period - usually two years. To supplement this, the developer usually invclude a clause in the contracts that if you dont meet that covenant, the developer reserves the right to buy back the land as a discount (usually 10 less than what you paid, or 10k whichever is greater - this differs between developers). Creator of superduperonium, expert at expert things, nobel laureate, can hold my breath for 10 minutes. 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