Page 39 - CBA_construction-loan-guide-Oct2020

Your home, your way
Construction loan terms, Final inspection Progress payment
On completion of your construction, we will
Payments made directly to your builder at different
in everyday language arrange for a final property inspection to confirm stages of construction. There are normally 5 to 6
progress payments depending on your Building
all works to the property are finished.
Contract and Progress Payment Schedule.
Interest Only payments
Plans and Specifications
The minimum payments only cover the interest
We’ve broken down common construction loan jargon and put it charges on the loan and do not reduce your loan The term plans refer to the drawings (usually
into everyday language for you in the following pages. balance. Interest Only payments are for an agreed prepared by the building company or architect) Plan your build
period of time. of the building to be constructed.

For more information go to The term specification refers to the written
instructions to the builder which contain all the
As if valuation Conditional pre-approval commbank.com.au/interestonly information pertaining to dimensions, materials,

Is conducted by a valuer who will determine what An indication from us that shows how much we are workmanship, style, fabrication, colours and
the value of the property will be at the completion likely to let you borrow based on a review of your finishes which supplement the details appearing
of construction. This is usually done before we financial situation and needs, and it’s subject to Out of Contract items on the plan of the building. co
provide final approval. certain terms and conditions. These are additional improvements or
renovations being completed in conjunction with Valuation
Building contract Construction loan your construction, however may not form part of A valuation is an opinion about the market nstruction loan Finalise your
the fixed price building contract. They’re
A legally binding agreement (between you and a A loan specifically for building or renovating where restricted to non-structural works, such as floor value of a property asset at a specific date,
builder) which includes and sets out (but is not you can progressively draw money from the loan and window coverings. by a person authorized to undertake
limited to) the work to be undertaken, plans and and only pay interest on the money you’ve used. valuations for security purposes.
specifications, costings, build schedule etc.
Council approval Principal and Interest repayments
Builder’s invoices This means your local council (or authorised agent The minimum repayments cover the interest
Your Builder’s invoices need to match the acting on their behalf) will determine if your charges and some of the principal loan balance.
Building Contact/Schedule. These are used to building plans and specifications meet the criteria,
confirm your authority for us to release the zoning requirements, laws, policies and legislation Ready to build
money to your builder. of the local area.

Builders licence (also referred to as Disclosure Date
Registered Builders) The Contract Schedule is dated the day the
A licence is required by an individual or company document is generated. This date is the Disclosure
who is signing the contract with the borrower(s) to Date and is stated at Item A of the Schedule.
carry out or organise building work.
Draw (also referred to as drawn)
Certificate of Occupancy and Compliance This is the progressive reduction of the available
(or equivalent) money from your construction loan as we make and repayments Managing your build
Is a certificate that confirms the construction progress payments to your builder. This allows for
has met all required standards and authorises lower interest payments as interest is only charged
occupation of the building. This is issued by the on the amount(s) drawn.
local authority, e.g. local council, at the end
of the construction. Elevations

Consumer Credit Contract Schedule These are diagrams that show (to scale and in
detail) what the exterior and/or interior walls (faces)
This sets out key details of your Contract or the of a building look like from a particular d irection.
Contract if varied.
Equity contribution Enjoy your new home
Commencement letter (also known as Owners contribution)

After your loan is formally approved and all the If you’re required to make monetary contributions
required construction and loan documentation is from your own money (such as savings) towards
held by us, we’ll send you and your builder a your construction loan, this is known as equity
commencement letter – this is our formal approval contribution or owner’s contribution. Keep in mind
that construction can commence and you can start the amount that you need to contribute depends A
dd
building your home. on your application. Contact your Home Lending i
i
Specialist or Broker for further information. t
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