Construction Loans

Considering taking out a construction loan. If I borrow say $300k and only draw down $250k for build, what happens to unused $50,000 in funds?

 

Could be available to redraw

 

Is this in progress payments or as a "cash out " lend?

If progress payments then funds borrowed equals fixed price building contract amount so cant see how you would have funds left over?

Sometimes there is a small amount left over that is transferred to your nominated account once funds are fully drawn.

 

He may be talking about an owner build....???

if so... good luck with that

 

A few different ways this plays out:

- 50k is delivered upfront as an equity pull, this is just an equity release really.

- 50k is held till the end and released to you. Surplus funds post construction.

- 50k in construction costs that were accounted for but not used or can't be evidenced. lenders may withhold this completely and 'control' it. If its not used, they may not give it out to you post construction, even though its part of your approval (as work may not have been completed or can't be evidenced).

 

I had a construction loan with CBA who made progress payments to my builder. At the end of it all, there were still surplus funds. I wrote a letter to CBA requesting release of the surplus funds to my offset account. My justification was that I had paid for a lot of items myself as they weren't part of the contract with the builder, e.g. landscaping, appliances, carpet, etc. They asked for the invoices but eventually deposited the funds into my offset.

 

Hi guys. We have bought a House and Land package where the minimum deposit for the land is 10% and 5% for the build. We have paid these minimum reqt out of our pocket so all good. However for the build, we wanted to make it 10% so we plan to use our FHOG as additional plus some of our savings again to complete 10% of the build. Has anyone done this before? I just couldnt get my head around the process. Appreciate your help! TIA!

 

You want to pay more than the minimum? You could, but why?
Why not just keep the extra 5% in a bank account earning interest.

 

You can go as high as 95% for owner occ and 90% for investment unless borrowijg capacity is the issue?

 

The builder can’t accept more than 5% before the slabs down. When the slab is down you can pay part of this invoice so your total contribution is 10%.

You need to arrange finance for the remainder.