There are always costs involved when building a new home. There are costs on the drawings of building plans by architects. There are fees payable for the approved building plans at the local authorities. There are payable rates and taxes to the Local Authority, after purchasing the vacant land or stand. You get your Interim interest charge which is your interest charged on the outstanding balance, from the date of the first debit on your Home Loan account, to the date of the final progress payment.

Now people think that building loans are easy to get, but they’re not. There’s a lot of work that goes into a building bond and costs and charges can become astronomical should things not be planned carefully.

Generally, depending which bank you decide to go with, once the bond is registered the land portion of the monies are paid out to you. The first progress payment to the builders/developers will need to be paid by yourself. The banks only release the first payment once they’ve sent an assessor out to value the property and assess what progress has been made on the building. Should this be a problem and you’re in some trouble, there’s always the personal loan route that can be take.

The building process is usually monitored and approved in various stages. Normally a contract specifies four stages: foundation, window ceiling height, roof height and final stage. An assessor will need to access the cost of the work completed.

The builder is normally the person that will request payment at which point you need to submit a progress report to the bank. After the assessor has assessed the cost of the work, carried out, payment will be authorized – with consent from the customer. The assessor will calculate the amount available.

Never sign a blank progress payment request and hand to the contractor. When the contractor calls for final payment, inspect the house to satisfy yourself that it has been completed to your satisfaction, which protects the consumer against the builder, walking away with all the money prior to completion of the building.

The contract needs to be completed are to be completed within the stipulated period as per the Home Loan agreement, failing which the bank reserves the right to withdraw its offer and then you’re left with building costs and charges that are guaranteed to put a dent into your pocket.

Don’t forget to get the NHBRC certificates from the layers.
Building Loan Application

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