Stage 5: Approval for your home loan and progress payments.
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 until:
- 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. The slowest stages are the first payment, base stage and your final payment as that is when a valuer will need to attend and this adds delays.
– Please note the final payment is ALWAYS the most frustrating of any build. You’re keen to move in. The builder is keen to get paid but the bank needs to make sure you’ve built a home that’s in accordance with what they have valued. The bank need to receive the invoice, appoint a valuer, the valuer needs to attend, complete a detailed report, sign off on the report, send it back to the bank, have it pass compliance, the bank then needs to approve it and then pay the builder. This will take longer than you want. This is true on EVERY construction loan and is unavoidable. Please be prepared for this.
– 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’. Land developers do not always contact NBN and submit the subdivision plans for NBN servicing. This means that new home owners end up moving in with no address in the NBN system, similarly this can be an issue with a subdivided block, where the old house has an address in the NBN system, but the new block/s do not exist. If you start this process early, you can catch this issue early too.
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!!
Remember, you can check back and forwards through the other stages as you need, at any time throughout your build.
Stage 1: Is building right for you?
Stage 2: Buying your block of land
Stage 3: Planning your build
So that’s it! I really hope you’ve enjoyed our ‘Home Building Guide’ and that it’s been helpful, and I would absolutley love it if you have any extra advice or photos that you’d be happy to share to make this resource even better!
‘We will tell anyone who will listen about our great experience with UpLoans! We had never built a home before and Kirsty, Carrie, Bel and team were so helpful and kind. They were always prompt with communication, and answered all of our questions with patience and understanding. They were there to help us during every progress payment to make sure all was going smoothly on the finance end. We appreciated being cared for instead of being treated as a number. Having walked a bit of our journey with us, we can sincerely say that they shared in our happiness on document signing day. We know we can still call on UpLoans should we need any more help with our current loan, and we won’t hesitate to use them if we decide to build again. Love you all heaps!!’
Hannah & Ricky
And this…. is what it’s all about. Congratulations Abby & Nick!!