Your Construction Loan Journey with Nexgen Lending
Are you ready to make your dream home on the Sunshine Coast a reality? Look no further than Nexgen Lending, your Sunshine Coast Mortgage Broker. With our expertise and dedication to providing top-notch service, Nexgen Lending is the ideal partner to guide you through the process of obtaining a construction loan. Let’s dive into the first steps of your construction loan journey together.
Simple Steps to Arrange Your Loan
- Booking Your Complimentary Appointment
Before you embark on your construction loan journey, it’s essential to schedule a complimentary appointment with Nexgen Lending. This initial consultation will serve as a foundation for understanding your unique needs and requirements. You’ll have the opportunity to discuss your construction project in detail, convey your goals and aspirations, and gain valuable insights from the knowledgeable team at Nexgen Lending.
During this appointment, Nexgen Lending will take the time to understand your financial situation, assess your borrowing capacity, and determine the right approach to securing a construction loan. This comprehensive analysis provides a solid framework for the rest of the loan application process, ensuring a tailored solution that aligns with your specific circumstances.
Booking your complimentary appointment is simple and hassle-free. Just contact Nexgen Lending via our website or contact our friendly team directly. We will be more than happy to accommodate your schedule and set up an appointment at your convenience.
Preparing for Your Financial Discussion
Once your appointment is confirmed, it’s time to prepare for your financial discussion with Nexgen Lending. This step is crucial in ensuring a smooth and efficient loan application and loan process. Gathering the necessary documentation and information beforehand can streamline the evaluation process and expedite your loan approval.
To make the most of your financial discussion, consider the following steps:
- Gather Financial Documents: Collect essential documents such as Income Statements, bank statements, proof of income, and any other relevant financial information about your personal circumstances. These records will help Nexgen Lending evaluate your financial capacity and assess your eligibility for a construction loan.
- Research Your Construction Project: Come prepared with a detailed plan for your construction project. This includes architectural designs, construction timelines, contractor quotes, and an estimated budget. The more comprehensive and well-prepared your project plan is, the easier it will be for Nexgen Lending to tailor a loan solution that meets your specific requirements.
- Ask Questions: Don’t hesitate to ask questions during your financial discussion. Nexgen Lending’s team of experts will guide you through the loan application process and address any concerns or uncertainties you may have. We will provide valuable advice and insights to help you make informed decisions about your construction loan.
- Loan Assessment
Once we have reviewed your details and documents, we will complete your assessment and provide you with recommendations outlining your contribution (deposit), the loan, and all associated costs to purchase the land, taking into account any Government incentives and concessions. If you are unable to obtain funding, we will explain the reason and what is required to achieve it.
We will also arrange a Valuation on your land and also the build. This type of valuation is generally called a “Tentative on Completion (TOC)” Valuation. The Valuer compares similar properties with your plans and specifications and provides an on-completion Value of your proposed property.
We arrange a meeting to discuss your options and highlight your loan options, and once you are happy, we will prepare your loan application for your selected Lender.
The next step after submitting your application is obtaining a “Conditional Approval”. Your application is subject to several conditions and will predominately be Valuation and a signed Building Contract, Plans and Specifications.
- Building Contract
If you haven’t already signed and provided us with a build contract, now is the time, as we need this to arrange a Valuation and to proceed to Formal/Unconditional Approval for your loan.
- Letter of Offer/Mortgage Documents
One of the highlights of what we do for our clients is obtaining formal/unconditional approval. This significant milestone is the official approval of your loan. Shortly after your approval, you will receive your letter of offer/mortgage documents. Generally, you have six months to sign from the issue date, but each Lender varies.
We make signing your loan documents easy, working through these together so that they’re completed correctly to ensure a smooth settlement.
- Settlement
When purchasing a property in Australia and securing a home loan, the settlement process typically involves the transfer of funds and legal ownership of the property from the seller to the buyer. The buyer’s conveyancer or solicitor coordinates with the seller’s representative and the Lender to ensure all necessary documentation is in place and the transfer of funds is smooth. Once the settlement is completed, the buyer assumes legal ownership of the property and can take possession as agreed.
When purchasing land that hasn’t registered, you generally have a set timeframe from when the land registers to when you need to settle. The most common settlement timeframe in QLD is 14 days from the time registration is called.
- Building Commencement
The first step after signing your build contract is to pay your building deposit, as your builder will complete soil testing, lodge to the relevant certifiers, and obtain Council approval.
Your builder will arrange their insurances over your property whilst it is being built. The Lender will require copies of all insurance and council-approved plans before they pay the base stage. Please see the “Document Guide” below for a detailed breakdown of the documents needed and when.
Your builder will provide a commencement notice.
- Construction
During the construction phase of building a home or building an investment property, you’ll witness the transformation of your vision into a physical structure. It’s an exciting time as you see your plans take shape, from laying the foundation to framing the walls and installing essential systems such as plumbing and electrical.
You must pay the remaining funds if your construction loan amount is less than your building contract. The lenders want your contribution before drawing down on the remaining loan left for construction. You can pay these funds directly to your builder (in this case, make sure to get a receipt from the builder on their letterhead).
HOW MUCH TO PAY AT EACH STAGE
The amount that needs to be paid will be outlined in the Progress Payment Schedule in your Building Contract. The amount varies by each stage of construction. Your builder will request payment on completion of each of the six stages of construction.
| Building Stage | Suggested % | |
Deposit  | The first payment goes to your builder and includes the payment for council-approved plans/building permits. | 5% |
Base/Slab  | The land is prepared, and the foundations are laid. | 15% |
Frame  | Walls and roof trusses are constructed—framing of doors and window cavities. | 20% |
Lock-Up/Enclosed  | Once the frame is complete, your builder will start on the roof, doors, windows, and external walls, which are finished so the property is lockable. | 25% |
Fixing  | Plumbing and electrical (including lights and power points) are installed. Internal cabinets and fixtures, plastering, painting, stone, and tiles are installed. | 20% |
Final/Practical Completion  | Painting, cabinetry, tiling and lighting are completed. Construction is complete, and you’re ready to get the keys. | 15% |
Document Guide – What to provide so that your property is built
We are with you throughout the whole construction phase ensuring that payments are made quickly.
Your builder will provide a stage or progress claim invoice to sign and forward to your financier within days of receipt for prompt payment. It is essential that you action each claim promptly to ensure progress on site is not interrupted or delayed.
| Documents you need to provide at each stage | Stage | |||
| Deposit | Base | Others | Final | |
| Fully executed building contract signed by builder and borrower(s) | ✅ | ⬜ | ⬜ | ⬜ |
| Signed letter of offer | ✅ | ⬜ | ⬜ | ⬜ |
| Builder’s invoice Description of work completed (see Progress Payment Schedule in your building contract) | ✅ | ✅ | ✅ | ✅ |
| Progress payment form* * Depending on the Lender | Only if paid from loan | ✅ | ✅ | ✅ |
| Builder’s Indemnity Insurance A copy of the builder’s indemnity insurance or warranty insurance certificate | ⬜ | ✅ | ⬜ | ⬜ |
| Builder’s Contract Works Insurance. A copy of the builder’s contract works insurance showing: Builder’s full name Insurance amount is not less than the amount on the building contract. | ⬜ | ✅ | ⬜ | ⬜ |
| Builder’s Public Liability Insurance A copy of the builder’s public liability insurance showing: Builder’s full name Minimum amount of insurance is not less than $2 million. | ⬜ | ✅ | ⬜ | ⬜ |
| Council approved plans A copy of Stamped council-approved plans and specifications required. | ⬜ | ✅ | ⬜ | ⬜ |
| Insurance policy certificate A current copy of your property insurance showing: Your name and address of the property Lender as the First Mortgagee/Interested Party For strata properties, a copy of the insurance policy may be required from your Body Corporate | ⬜ | ⬜ | ⬜ | ✅ |
| Certificate of occupancy or completion certificate for extensions For the following states, ONLY VIC, TAS, NSW & QLD | ⬜ | ⬜ | ⬜ | ✅ |
In addition to above, please include the following for the first payment for the below states:
| VIC | TAS | NT | ACT | SA | WA |
| Building permit | Building & plumbing permits | Housing guarantee certificate | Home warranty insurance | Housing guarantee certificate Council approval for development | Building permit (BA4) Certificate of design compliance (BA3) – if applicable |
- Practical Completion
Reaching practical completion of your home is an exciting time. It signifies that all construction work is finished, and the property is now suitable for occupation. This stage triggers the beginning of the defects liability period and the handover of keys, marking a significant milestone in the building process.
A property inspection is to take place, and any defects to finishes are to be completed. The final inspection certificate (form 21 for a single dwelling or form 16 for a multi-unit dwelling) will be issued in QLD. If you are building an investment property, then your Property Management team will contact you to arrange to find a tenant and finalise other requirements for the property before tenancy.
If you are building a house, you must arrange building insurance over your property. If your property is in a complex, you may need to request your body corporate to provide a copy of the building cover (sometimes your solicitor will provide this).
Once you are happy with the final touches and build, the lender will need your authorisation to make the final payment.
When you have paid the final payment, it is time to collect your keys and builders’ welcome pack. The welcome pack will include manuals, warranties, proof of purchases, and your maintenance contacts.
Congratulations on building your home or investment property! Your Construction loan has now finished, but it doesn’t end there with us. We will keep in contact to ensure that your lending continues to meet your requirements and that you have access to some of the most competitive home loan or investment loan rates.