Building or renovating a house is already complicated enough. With big decisions to make, ranging from which walls to knock down to what colour to paint the existing ones, the last thing you want to stress about is navigating the construction loan process.
Here we make it easy for you by breaking the process down step by step:
Step 1. Application
To apply for a construction loan you will need to submit an application form and supporting documents to verify your financial circumstances, just like any other home loan application.
We will assist you with defining the best lender, struct and product, whilst also preparing the paperwork you need to sign. Basic supporting documents at this stage includes a draft building contract, plans and specifications.
Step 2. Conditional Approval
If the lender is satisfied with the information provided, they will conditionally approve your loan subject to receiving relevant information and mainly to an ‘as if complete’ valuation.
This valuation is an inspection, followed by a report prepared by a third party valuer that defines what the property’s value will be once the construction work has been completed.
Step 3. Unconditional Approval
In order to proceed with a formal approval, you will be required to provide the following documents and information:
- Final building contract and progress payment schedule
- Builder’s insurance
- Public liability
- Council approved plans
- A costing report (if construction value is greater than $1 million)
Step 4. Commencement of Works
You are now ready to start the construction process! You will also need to provide the builder with your deposit amount and start paying off whatever contribution percentage you previously agreed upon.
Step 5. Payment Schedule
Once you have paid off your contribution, the loan will be paid as a series of progressive payments aligning with the progress payment schedule from the lender, direct to the builder.
For each payment you will need to provide the lender with an invoice of payment from the builder with the amount to be paid, the progress of building works and preferred method of payment.
Step 6. Final Payment
Once the final payment invoice is received by the lender, a final inspection will be conducted to confirm the previous ‘as if complete’ valuation.
If the final inspection matches the agreed price, payment will be released to the builder and you will receive a formal letter confirming payment
Step 7. Completion
You will now have access to your newly renovated or built home and any remaining funds from the loan will be deposited into your account.
If you’d like to chat about getting started, send me an email, or book in a time here: Joel Wyld Calendly