How does a building loan work?
The application will be assessed on receipt of the necessary documentation in line with the policy and lending criteria of the bank. Assuming the bank is in a position to assist, the bank will require the customer to finance 10% of the total package price (land + contract amount) up front, in all instances; this however could increase dependent on the credit profile score of the applicant(s). The 10% requirement is based on the bank’s assessment of the completed value of the property.
If the customer is granted a loan amount with a shortfall (a loan amount of less than the contract price), the customer will be required to complete building to the value of the shortfall amount upfront from his/her pocket.
Additionally, the bank will require the builder to build a further 10% of the contract price from his/her funds before any funds will be paid out from the Home Loan account. The final quote will have a condition stipulating this requirement and the customer will be advised of the requirement when final customer contact is made.
You have 12 months to complete the building. Construction work must commence within the first 3 months following registration. Your loan term is limited to 240 months.
Do I need to provide a deposit?
The bank will require the customer to finance 10% of the total package price (land + contract amount) up front, in all instances; this however could increase dependent on the credit profile score of the applicant(s).
The 10% requirement is based on the bank’s assessment of the completed value of the property. If the customer is granted a loan amount with a shortfall (a loan amount of less than the contract price), the customer will be required to complete building to the value of the shortfall amount upfront from his/her pocket.
Additionally, the bank will require the builder to build a further 10% of the contract price from his/her funds before any funds will be paid out from the Home Loan account. The final quote will have a condition stipulating this requirement and the customer will be advised of the requirement when final customer contact is made.