Ah yes, banks are your friends. They tell you they’d be delighted to finance your renovation, but once you begin building and the progress claims start arriving in your mailbox in their neat little envelopes, the bank decides it has changed its mind. That's what happened to us, at least.
Having little money as it is, being sued for defamation is not high on my wish list, so the offending bank will regrettably remain nameless. Said bank accepted our preapproval application subject to a satisfactory valuation. The valuation came through (that in itself was a rigmarole) within the agreed limits, and so we expected our finance to be stamped and approved. “Sorry, we don’t do these types of loan anymore,” the bank said “Ta ta.” Well, the builders had already been working for two months, and all of our money had been consumed. The contract we had signed obliged us to pay all progress claims within seven days of submission. And our next one was due in a month.
To make matters worse, we had booked an overseas holiday for the following three weeks and had two days to organise alternative finance before we left. Our ever-suffering mortgage broker came to our rescue along with another bank (at a higher interest rate unfortunately), and we had the application in five hours before our flight departed.
Five weeks later we are still waiting to hear whether our refinance has been successful, and our builder has informed us the next progress claim will be submitted within the week.
The last thing I want is to be unable to pay the builder and be left with a half renovated home with multiple catflaps, but that is indeed looking more and more like my future, rather than the scary parallel future it should have remained.
So, if you plan to commence work before the finance is fully approved, I would recommend getting preapproval from more than one lender before you start.
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