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Construction Lending

If you are building your home here is the construction loan process from the bank’s point of view 🏦⁠

When applying for a construction loan to build a home, your lender will need: ⁠

👉 A copy of the building contract/ tender and plans. ⁠

👉 Their valuer will then estimate the on-completion value of the property and assess your loan on the lesser of the land price plus cost of construction or the on-completion value.⁠

Like any other home loan, the lender will send out a loan offer for you to sign and return once your loan is approved. ⁠

Before your builder is ready to begin receiving payments from the lender, documents such: ⁠

👉 As final council approved plans, ⁠

👉 Drawdown schedule and ⁠

👉 Insurance will need to be provided. ⁠

Each invoice will represent a stage of the building process and will require progress payments. ⁠

Typically this is sent after the completion of a milestone stage. For example:⁠

👉 Stage 1 Deposit to the builder⁠

👉 Stage 2 Base/ Slab⁠

👉 Stage 3 Frame⁠

👉 Stage 4 Lockup⁠

👉 Stage 5 Fitout ⁠

👉 Stage 6 Completion 🏡⁠

How do you request that the bank pay your builder directly?⁠

• You will receive an invoice from the builder⁠

• You’ll then complete and sign a drawdown request form (available from your lender).⁠

• Return the signed drawdown form and the invoice from the builder, to the construction department of your lender⁠

• The Lender may order a valuation to verify the work that has been completed to date.⁠

• Within 5 working days, funds will be paid to your builder⁠

• Repeat for each progress payment stage of the building process


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