Very few lenders will provide bridging finance to cover a proposed mortgage security position where the dwelling is not yet built or is to be built.
Most lenders provide finance to assist the construction of an owner occupation dwelling.
Very few will provide finance for a true owner-builder proposition. But have a talk with us.
Lenders will consider a preliminary proposal for construction where the plans and specifications have not been approved by council or certifiers, and where a contract has not been signed.
It is important to ascertain firstly, if you can obtain pre-approval for your project.
Once the lender has provided the advice, you can then proceed to finalise arrangements with your licensed builder.
You may find that the builder will require from you a deposit to cover set-up approvals, council fees, soil testing, site preparations, architect's fees, and engineer’s certificates.
It is common among lenders to seek before final approval or prior to funding of the loan:
Council or a certifier has approved the Plans and Specifications;
Any deviation from regulation has been approved and an advice is to hand;
There is a firm quotation price to build the dwelling;
That you have adequate funds to complete (if required);
There is a dated and signed Building Contract with a schedule of progress draws in place; and,
The licensed builder has provided a copy of their building insurance, workers compensation cover and public liability insurance.
Depending on your equity level before construction starts and/or the loan facility type, you will find that the lender will control the release of loan funds to your licensed builder. The lender will rely on your written instructions that you approve the payment to the licensed builder.
There are circumstances where the loan can be fully funded and you control payments to your builder without further involvement from your lender.