Call 1300 13 20 70
Lawform Financial Services Group Pty Ltd
12 View Street, Camden, NSW 2570
12 View Street, Camden, NSW 2570
Lawform has the knowledge and experience to get your construction loan application approved and work with the Lender and Builder right up to when your house keys are handed over.
Construction loans can be complicated and not all Mortgage Brokers or Lenders have the systems or the expertise to deal with them.
What to consider before you speak to a builder
It is often best to discuss in advance with a Lawform Broker your borrowing capacity prior to speaking to a builder. We often see clients come to our office with a full tender, plans and specifications to build, when in fact they can’t afford to complete the construction due to serviceability and loan approval. Come in and chat to us about what yours plans are, what you believe to be an approximate cost for construction and completion of your property i.e. fencing, driveways, landscaping etc. To find out in advance your borrowing capacity, affordability and needs, will enable you to speak confidently with a builder under your terms not theirs.
It is also wise to discuss with the Builder what costs could be incurred outside the Fixed Priced Building Contract. Many clients have been hit with unexpected costs outside their control. You need to keep this in mind and allow for the unexpected.
How do construction loans work?
A pre-approval for a land and/or construction loan can be established prior to receipt of a builders tender, council approved plans or a Fixed Priced Building Contract. The preapproval will allow you to confidently speak to a builder based on your affordability. Pre-approvals will last up to approximately 3-6 months – giving you time to negotiate your construction.
Once you have established a Tender or Fixed Priced Building Contract with a builder, a Broker will submit the Tender/Contract together with Plans and Specifications to the Lender of choice for the purpose of approval. The Lender will order a valuation against the new construction before approval is given to make sure the builder has not over quoted and the construction costs are within standard building costs.
Formal Approval is usually granted if serviceability and valuation results are in line with Lender policy.
Once council approved plans and specifications, all builder insurances and proof of borrowers contributions (if any) have been submitted to the Lender – a Broker can request first draw down of loan for first stage of construction, to be paid to the Builder.
A Broker should not request any drawdown of a building loan until the borrower has requested it in writing for the next stage to commence.
Prior to final drawdown/stage of construction the Lender will seek a 2nd valuation/inspection of the property by a specialist construction valuer to make sure the building is in line with standard building requirements – protecting both you as owner/borrower and the Lender.
An Occupancy Certificate is issued by the Council (builder requirements) to enable final drawdown and settlement of your loan.
What to consider before you speak to a builder
It is often best to discuss in advance with a Lawform Broker your borrowing capacity prior to speaking to a builder. We often see clients come to our office with a full tender, plans and specifications to build, when in fact they can’t afford to complete the construction due to serviceability and loan approval. Come in and chat to us about what yours plans are, what you believe to be an approximate cost for construction and completion of your property i.e. fencing, driveways, landscaping etc. To find out in advance your borrowing capacity, affordability and needs, will enable you to speak confidently with a builder under your terms not theirs.
It is also wise to discuss with the Builder what costs could be incurred outside the Fixed Priced Building Contract. Many clients have been hit with unexpected costs outside their control. You need to keep this in mind and allow for the unexpected.
How do construction loans work?
A pre-approval for a land and/or construction loan can be established prior to receipt of a builders tender, council approved plans or a Fixed Priced Building Contract. The preapproval will allow you to confidently speak to a builder based on your affordability. Pre-approvals will last up to approximately 3-6 months – giving you time to negotiate your construction.
Once you have established a Tender or Fixed Priced Building Contract with a builder, a Broker will submit the Tender/Contract together with Plans and Specifications to the Lender of choice for the purpose of approval. The Lender will order a valuation against the new construction before approval is given to make sure the builder has not over quoted and the construction costs are within standard building costs.
Formal Approval is usually granted if serviceability and valuation results are in line with Lender policy.
Once council approved plans and specifications, all builder insurances and proof of borrowers contributions (if any) have been submitted to the Lender – a Broker can request first draw down of loan for first stage of construction, to be paid to the Builder.
A Broker should not request any drawdown of a building loan until the borrower has requested it in writing for the next stage to commence.
Prior to final drawdown/stage of construction the Lender will seek a 2nd valuation/inspection of the property by a specialist construction valuer to make sure the building is in line with standard building requirements – protecting both you as owner/borrower and the Lender.
An Occupancy Certificate is issued by the Council (builder requirements) to enable final drawdown and settlement of your loan.
