Our Clarendon Construction Home Finance Specialists are here to share with you some of the common issues they come up against when they don’t handle the finance process for Clarendon Home clients.

Construction loans can be quite involved, so these tips might help you avoid some common missteps, such as:

Protracted approvals are one of those unnecessary frustrations that you may encounter if you work with a lender of your choosing or a broker who doesn’t explicitly specialise in the more complicated construction space. You ideally need to secure loan approval before signing building contracts, on average that’s about 10 weeks away from the day you pay your deposit. In our experience, some lenders are lightning fast whilst others drag their feet. 

Sadly, it’s idealistic to think the organisation you’ve banked with for decades will do you a great construction loan deal. Luckily for you, we have years of experience in negotiating loans and have access to great deals from a large number of lenders. I am more than happy to save you the hassle of dealing directly with your lender and can organise all facets of your loan for you.

Having conditional loan approval allows you to know exactly how much you’ll have to spend on your home and any upgrades or variations. Because conditional loan approval can take up to a week, it’s best to start the process as soon as  possible after your tender appointment.

Before granting approval, your lender will also need to verify your employment, your income, and your debts, as well as run a complete credit check. They’ll also need a guide on your construction plans, what you’re hoping to build, with what specifications and in what timeline. Ensure accurate paperwork is submitted.

In order to avoid any delays down the track, we recommend that you obtain conditional loan approval prior to your building contract  appointment. On occasion, this doesn’t happen and has the potential to slow down the pre-construction phase significantly.

Customers are not always granted a loan on the same terms promised to them at the pre-approval stage. Pre-approval is different to conditional loan approval as it doesn’t include various checks and confirmations. Pre-approvals are mostly a guide and shouldn’t have too much reliance placed on them. 

You’ll need to be on top of all elements of your construction loan process management. This includes, amongst other things, making an appointment to see your chosen bank manager or broker, accurately completing your loan application by compiling and supplying all the relevant loan documents to your chosen lender, sending a copy and then confirming receipt of the tender, supplying a preliminary budget, securing conditional loan approval et al… Note: there are 34 steps in the process!

Remember to provide your bank with details of your exterior and interior finishings selections, submit your ‘bank pack’ to your lender and follow them up for a formal approval (also known as a letter of offer) and mortgage documents, and provide that letter of offer to us.  Sign and return those documents before supplying all finalised contracts to inform the lender’s commencement letter ensuring you have loan approval that states an amount sufficient to pay the contract price and contains the words “authority to commence construction” or “building works may commence”. Finally you'll coordinate each of the progress payments within the payment window with your lender, ensuring your funds are released before the due date in order to avoid late fees.