How long is a formal approval for a construction loan usually valid for?

Discussion in 'Loans & Mortgage Brokers' started by Natedog, 21st Mar, 2016.

Join Australia's most dynamic and respected property investment community
  1. Natedog

    Natedog Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    373
    Location:
    Brisbane
    Hi all,

    Assuming we have a signed building contract, valuation stacks up etc.

    If we get a formal approval for a construction loan, how long is it valid for?

    is it 6 months the limit to when the first drawdown has to occur by ? Am looking at ANZ specifically as that is who the loan is with currently.(it's a knock down and rebuild scenario)

    Any info is appreciated, I could wait and find out tomorrow, but am impatient :)
     
    Natedog, 21st Mar, 2016
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    42,005
    Location:
    Australia wide
    Once you have signed I would have thought 30 years. Not sure if there is any requirement for construction to commence within a certain time frame - but there must be.
     
    Terry_w, 21st Mar, 2016
    #2
  3. sanj

    sanj Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    3,471
    Location:
    Perth
    I'd think so too, I assume even if a small deposit was paid to the builder it woulf constitute the construction loan being "active" but I don't really have anything specific to base that on
     
    sanj, 21st Mar, 2016
    #3
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,171
    Location:
    03 9877 3000
    I think once it's set up the loan account is actually in place there isn't a real limit. There's probably something deep in the terms and conditions, but I've never seen this executed (and I've seen a construction take up to 6 months to get started).

    @tobe is the guru of all things construction. He might have some insights.
     
    Peter_Tersteeg, 21st Mar, 2016
    #4
    tobe likes this.
  5. S1mon

    S1mon Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    604
    Location:
    canberra
    ive got one settled with choicelend and asked that question recently, and they said no time limit to start drawdowns
     
    S1mon, 21st Mar, 2016
    #5
  6. Natedog

    Natedog Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    373
    Location:
    Brisbane
    Just found a CBA construction loan fact sheet online which says construction must commence in 6 months and be completed in 24 months.

    I'll post on here if I get any confirmation from ANZ tomorrow how they operate.

    Cheers all
     
    Natedog, 21st Mar, 2016
    #6
  7. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,814
    Location:
    Melbourne
    Most lenders have something between 6 and 12 months to start and 24 to end, once the loan has started drawing with the land settlement, or in this case refinance.

    If the land isn't settled, the approval only last 3 to 6 months depending on the lendr and mortgage insurer.

    Most land developers also have time limits to start and finish building (though this post is about a knock down).
     
    tobe, 21st Mar, 2016
    #7
    Natedog, docplus and Peter_Tersteeg like this.
  8. Natedog

    Natedog Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    373
    Location:
    Brisbane
    Yep,

    Confirmed with ANZ today construction start within 6 months of formal approval of loan is required.
     
    Natedog, 22nd Mar, 2016
    #8
    Terry_w likes this.
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,654
    Location:
    Gold Coast (Australia Wide)
    AMP and NAB are both complete within 12mths

    ta
    rolf
     
    Rolf Latham, 22nd Mar, 2016
    #9