This draft has been slowly building over 18 months because no-one warned me how long and drawn out the financing process is for building your own home!
We first met with our broker to discuss our plans to buy land and build, what sort of money we could realistically borrow etc. our broker is old school and very conservative, he warned us of overextending ourselves and recommended our planned funding was the max we should spend. My parents had agreed to be guarantors for us to avoid LMI so we also discussed how that limited our choice of banks.
$1000 deposit on our lot at Willowdale, followed by 5% at the end of the month when we signed the contract. At the direction of our broker we didn’t apply for any loan preapprovals at this point as we would just have to keep renewing it until the land registered, creating extra work all round. He felt we from his analysis that we would not have any issue with getting approval for the amount we were requesting.
Land registration was due in June so we were in the 3 month window and began our land loan application with Heritage bank (proof of savings, proof of income, proof of debts/spending ie. credit card statements and land contracts).
Due to developer delays, we finally got access to our land and our land valuation was completed. Also provided updated copies of all our evidence due to the time gap. Unconditional approval late June.
Settlement on our land, officially have a mortgage!
Build loan application lodged with Heritage Bank.
Lots of back and forth with our broker and the bank over our building tender and contract not providing adequate information to complete a valuation on the build. After 2 weeks of providing every last variation, quote and plan it turned out the bank assessor didn’t bother to read our contract past page 5 and they had everything they needed from day 1. Valuation completed on my parents home to confirm them as guarantors.
Conditional approval with about 10 conditions – one being the bank wanted the progress payment schedule heavily modified because it was “too top heavy”. At the same time I had just taken a new job and given my notice at work (more about that in a separate post). After 2 weeks it was clear the bank and Wisdom would not come to agreement and we pulled the plug on our loan application.
Two weeks of angst followed trying to find another bank who would approve an application for us with me in a brand new job and would agree to the progress payment schedule – finally settled on CBA as our only option.
Application lodged with CBA to refinance our land loan and for our construction loan. Another round of paperwork and updated evidence documentation. Unconditional approval granted mid December and loan documents signed the weekend before Christmas.
Then we got notice that CBA had made a mistake on our main loan document and so they reissued the documents between Christmas and New Year
Re-signed loan documents in early January. A request for council approved plans and copy of private certifier’s accreditation from the bank put a hold on everything for 2 weeks while we waited for the certifier to come back from Christmas shutdown then obtain a copy of their own certification from the government (apparently they don’t keep it on file…). Another request followed for an updated copy of Wisdom’s liability and third party damages insurance which was obtained and returned within a day.
Approval to commence construction received on 30th Jan and the letter of authority to commence construction provided via email (on request…they post it by default) on 31st Jan. Hallelujah!