Fixed Price FAQ’s

Fixed Price FAQ’s

How do the Progress Payments work?

Construction loans work on a progressive drawdown basis, in line with your building contract’s progressive payments schedule. On a standard domestic building project the loan will generally be drawn in the following stages; 1) Deposit, 2) Base, 3) Frame, 4)  Lockup, 5) Fixing, 6) Completion. An applicant’s own funds, if any, must be contributed prior to the first progress payment being made and the lender won’t release any funds until each stage of the construction has been completed. The funds will be paid to you in drawdowns ensuring you only pay interest on the portion of the construction loan you have drawn down.

What are the time-frames to reach full approval?

Time frames from loan submission to full approval vary from lender to lender, and are largely determined by how long the valuer takes to inspect the property and return the valuation.  The entire loan process to full approval can take between 2-4 weeks on average from submission of your application.

Will the lender finance additional work completed by contractors?

If there are additional works which will your builder will not be completing such as swimming pools, landscaping, driveway, shed’s, etc., please advise us as early as possible.  If you can provide a formal written quote for this work then we can often get the bank to finance these costs, depending on the nature of the work and your chosen lender. Please be aware that some lenders will only release money for the additional work once the house is completed. In some cases we may need to change lenders if this does not complement your construction schedule. We recommend that you keep saving during the construction process and try to avoid going over budget. It is also worth considering getting approval for a slightly higher loan amount to ensure that there are plenty of funds available.

How will my loan repayments be calculated?

If you have a split loan for your land and construction, lenders can allow your land loan to be interest only payments during a set period of time. Construction loans usually allow interest only payments up until construction is complete. Once your construction has been completed, your loan automatically converts into a Principal and Interest Home Loan or Investment Loan, unless  you specify, prior to your application being submitted, that you wish your construction loan to remain interest only for a longer period.

What is the NCCP Act 2009?

The National Consumer Credit Protection Act (NCCP) is legislation designed to protect consumers and ensure ethical and professional standards in the finance industry through the National Credit Code (NCC). The act is regulated & enforced by ASIC. A major part of the act is that all lenders and mortgage brokers are required to hold a credit license or be registered as an authorised credit representative.

Why can’t I find out the lender?

We frequently receive requests from people who would like to know the lender and the interest rate. Under the new NCCP Act it is against the law to provide advice or recommend a product prior to knowing and verifying appropriate information about a customer’s full situation, objectives and financial circumstances. Taking such  reasonable steps to verify your financial situation, along with seeing your supporting documents and completing a Preliminary Assessment is the only way for us to determine if the lender and the loan product we are recommending is appropriate and affordable for you.

Contact Us Today!

Contact My Property & Finance today and one of our friendly finance specialists will walk you through your construction loan options.