After your valuation is done the next stage is to apply for your finance. This follows a pretty standard procedure and your broker will step you through this. Allow 2 weeks after your valuation has been completed for the approval, and then another week for documents to be delivered to you, signed and returned. All up 3-4 weeks should be ample, but keep this in mind when chatting with your builder about time frames! It could be sooner, but don’t have them waiting on the go ahead as no payments can be made to them unit:
– Your loan is approved
– You have signed your loan documents
– You have your council approvals
– The bank is ready to “settle your loan”
During the construction of your home you will only be required to make interest repayments (not principal) and these will be calculated by the bank monthly based on the outstanding balance with however much has been paid out at that time.
So”¦ how does your builder get paid?
Well first of all – if there was any of your own money that was being paid to the builder, the bank will want you to pay this first, before they contribute any funds. Be sure to get a receipt for any payment you’ve made to the builder at any stage along the way and give to your broker.
Every time the builder completes a stage (in accordance with your fixed price building contract) they’ll send you an invoice.
You will then (depending on which lender is involved) either complete a lender progress payment form, and all parties to the loan will sign it or you’ll simply sign and date the invoice (your broker will tell you which one it is for your lender).
Then you’ll email that form (if required) and the signed invoice to your broker who will then send it to the bank and follow up for payment.
Important to note:
– Never sign your invoice to be paid if you’re not happy with the completed work thus far. Here’s what some existing clients of ours said about their biggest regret while building: “My biggest regret is we didn’t do an inspection of the property before the final payment was paid and as a result on handover day we noticed the painting was terrible, we couldn’t move in for another 2 weeks until it had been repainted. ”
– Don’t guarantee your builder a time frame on the payment as lenders can take 5-7 days (and sometimes longer if valuations are held up) to make payment once the invoice has been assessed
– If there are variations along the way, remember what we said, you’ll need to fund these yourselves as you go through and this can get costly! So avoid where possible and have in depth discussions with your builder about costs where necessary.
– At different stages along the way the bank will want to be sure your build is progressing well and a valuer will be sent to the property to assess (this typically happens when your slab is down and at the final payment stage)
– You will need to also provide your certificate of occupancy with your final invoice along with your own home insurance (we can assist you in getting a quote for this)
– And here’s a great tip to think of at this stage from a client who has completed their build with us “Start the NBN process even before your house is complete. 3 months on and we still aren’t connected as our address was one of many missing from the NBN system despite our neighbours being already connected and all our infrastructure in place. It’s going to be a long process unfortunately and very common apparently.”
If there are any surplus funds left over (if your build has come in cheaper than quoted) at the end of your building quote the lender will typically release these to you if you have a sufficient amount of equity in your property at the end of construction.
And then? Well pop the champagne, you get to move into your home! Now depending on what was or wasn’t included in your building contract you may now have to get your hands dirty with some landscaping or some other works, but this is YOUR Home – enjoy!!
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