There are a lot of changes in the lending arena that have resulted in consumers having to struggle to obtain finance. This is especially true for investors wanting to build single houses or developments. Some of the finance limitations are for:
– Interest-only loans
– Investment/construction loans
– Affordability restrictions (Tighter servicing)
– Consumer loans with tighter assessment
– More conservative valuations
Unfortunately, these challenges affect builders and have subsequent flow-on effects to the other trades. Common issues consumers face with their construction loans include:
1. The loan being structured incorrectly with the land and construction loan being established as a single loan.
2. The building contract requiring monthly payments from the bank instead of staged payments. Banks are not favouring these types of loans anymore.
3. Significant variations to the building contract during the construction period, which can trigger reassessment of the loan and, in most cases, will cause extensive delays. If the lender’s serviceability has tightened since the original approval was given, it may also cause the entire loan to be put in doubt.
4. The consumer running out of money due to variations or not borrowing enough, thinking they can work it out during construction.
The majority of these issues can be avoided or at least mitigated if your clients use an experienced finance / mortgage broker to organise their funding. By providing your clients this option, it shows your value as a builder goes well beyond the construction itself, and may genuinely provide them with additional benefits by using you, a Master Builder!
Feel free to provide your clients with the contact details of Master Builders Financial Services, but be sure ask them to mention your company’s details and that you referred them to us. Master Builders Financial Services’ number is 1300 137 539. Master Builders’ general number is (03) 9411 4555.
This article is general in nature and not to be considered specific advice as your situation has not been taken into consideration.
Chocolate Money t/a Master Builders Financial Services and Australian Credit License – 387277