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Construction Finance Question

Discussion in 'Property Finance' started by albanga, 20th Jan, 2016.

  1. albanga

    albanga Well-Known Member

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    Hi All,
    Just a question regarding finance on construction. When a valuer looks at the fixed price build contract do they identify missing things such as driveways and require you have enough available funds to pay for this before lending?

    Example - Say I have a fixed price build contract for 300k but missing is a driveway, say the driveway would cost 20k

    Would the valuer look at the contract and say you need it added into the contract, or would they say you need to have enough available funds in your savings or would they not care??
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    yes
     
  3. albanga

    albanga Well-Known Member

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    To which part :)
     
  4. tobe

    tobe Well-Known Member

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    No, the valuer may mention it in their report.

    The assessor will also look through the plans and anything missing is likely to flag a question.

    Under 80% it's unlikely to be an issue. Above and you may have to show either or both the funds to complete the build and or a quote or invoice for the required works.

    At one stage BankWest got window treatments in their bonnet. It was really painful as most builders don't do curtains and valuers wouldn't always include the value in the report. Really difficult for fhbs without much deposit.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I just did a construction loan with Bankwest and they wanted quotes for curtains, drive ways, fencing, landscaping etc.

    Need to have enough funds for these if they are not in the contract.
     
  6. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    You don't need non essential works on the contract - but this can negatively affect the valuation.

    Dependent on the lender they may or may not require you to show the capability to fund those works from your cash - generally not.
     
  7. albanga

    albanga Well-Known Member

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    Thanks all for the great responses. Sounds like it is somewhat a grey area for the various lenders and that Bankwest are not great for construction!
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Bankwest are very good for construction. The just have a thing about curtains.
     
  9. euro73

    euro73 Well-Known Member Business Member

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    Take too many loans at Bankwest and your borrowing capacity will be curtains :)
     
  10. albanga

    albanga Well-Known Member

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    haha we really not an emoticon for a drum roll