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Construction loan

Discussion in 'Property Finance' started by sumterrence, 24th Jul, 2015.

  1. sumterrence

    sumterrence Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    172
    Location:
    Sydney
    Can someone tell me roughly how does it work and also what sort of documents are required?

    And usually under what circumstances people do construction loan instead of just topping up their existing loan?
     
  2. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    641
    Location:
    Sydney
    You will need the following:

    1. Copy of the DA
    2. Plans
    3. Executed building tender or contract

    You may be able to get away ordering an upfront valuation without the DA or CDC letter.

    The construction loan will be a separate loan.

    How many dwellings are you building?
     
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  3. wombat777

    wombat777 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,423
    Location:
    33°41'24.7"S 150°55'34.3"E
    Ensure that you don't over-capitalise on the build if it is an area with declining market. Otherwise you could have issues with the valuation at the end of the build and need to contribute more cash.

    Try and get a fixed-price contract if you can. Also have contingency funds available. These two things are most important if you have a problematic site - rock where pipes or foundations need to go, trees close to the building zone, significant slope.