Home and Land Package Building Price Went up. Can I Increase The Construction Loan?

birobiro13 on 04/12/2021 - 16:40
Last edited 05/12/2021 - 00:01 by 1 other user

Hey guys we are building our home sign all papers land been settle ..long short history ….

Builder got the deposit last week. Then this week got a letter stating due the shortage of material and material price our building has an increase in price. So they want us to agree on $17k extra. Now I used all my money in this deposit.

My question is … land is settle so the left over now is a construction loan, is that possible to increase the construction loan? And get this done? If not, my choice is wait 2 years according to the builder. And then I would be charged for delaying the construction as well. So I'm not sure how to goes from here. What meant to be an exciting process has been a nightmare… please don't judge… I know how things are I work I administration in material for building my self but I asked this before sign my contract and was told they fine nothing to worry. It's my first home this one. I would love to just have the money and pay it, unfortunately I don't.

Home & Garden

Comments

  • EightImmortals on 04/12/2021 - 16:47
    +7

    Was there a firm price listed in the contract? If so then the builder is in breach if he tries to get more money out of you.

  • birobiro13 on 04/12/2021 - 16:57

    Its not fixed but states he cannot add price up for materials but also is a big contract and somewhere there he will be able to claim some money, but my worry is if bank not approve then what not sure how bank works with these things

    • Muzeeb on 04/12/2021 - 17:04

      Banks are more than aware of increased building material costs. Speak to them to work out your options.

      /<hand holding>

    • orangetrain on 05/12/2021 - 10:38

      Big contract? Sounds like you just accepted whatever is on it. You need a lawyer ASAP so that it's just "a contract" to you. Even if bank approves, the builder could cost you more money.

      Remember, if something is going to cost more than $10k, you better understand everything when giving away your savings!

      Developers are notorious for screwing over people. The law also favours them to an extent.

  • SF3 on 04/12/2021 - 17:05
    +3

    Ask your lender?

  • birobiro13 on 04/12/2021 - 17:10

    Tks guys we have asked the lender just waiting to hear I belive it would be OK if they have us 500k loan to increase by 17k. Thats my hope

    • Raz3r on 10/04/2024 - 11:32

      What was the outcome? did bank increase the loan

  • upended on 04/12/2021 - 17:15

    Before reaching out to OzBargain advisers, I suggest you reach out to your bank. Explain to them the situation and I'm sure you'll get an answer from them.

    Is your concern that the builder has increased the costs or is the bank your concern? I suggest you continue discussing/negotiating with the builder and in parallel, also speak to your bank.

    If you accept the increased costs and your bank also approves, you should still clarify with the builder that costs won't increase again. Best to get this in writing.

  • birobiro13 on 04/12/2021 - 17:31

    Yes thanks mate I jave contacted the bank and current waiting on a reoly im just waiting to hear others opinions thank you

  • screensaver on 04/12/2021 - 17:51

    contact fair trading. there are some dodgy builders, also speak to your solicitor, and do a search to see of there are any reviews for this company etc

  • AdosHouse on 04/12/2021 - 18:57
    +1

    While I know housing material costs have risen, I don't think there has been a massive jump in the last week. Builder is pulling a dodgey.

    Would be a different story if the contract was signed months ago.

  • lachhelix on 04/12/2021 - 19:05
    +3

    For the sake of $17k I'd speak to someone with legal experience to check your contracts to see whether they can boost the price up.
    If they can't, well there you go
    If they can, speak with the bank and find out your options

    • Extreme on 05/12/2021 - 11:21
      +2

      This.

      For $17k, I’d be seeking legal advice surrounding the building contract.

      It seems rather convenient that you paid the deposit last week and they’ve chucked an extra $17k onto it this week.

  • garetz on 04/12/2021 - 22:25

    Depends on the valuation of the property, if cost increases but the property valuation stays the same, then it is unlikely.

    btw, if the material costs increase and they try to pass it on to you, and they offer to extend a wait of 2 years from now, its not your fault, its their fault, so there should be no additional cost to you to do this.

    otherwise get your money back and find another builder, I would explain that any additional cost will put your finances in jeopardy and as such cannot continue with the contract. so you will have to withdraw as they did not hold up their end of the contract.

  • birobiro13 on 04/12/2021 - 22:42

    Thanks guys much appreciated all input here.

  • AlanJ on 05/12/2021 - 08:34
    +2

    As you say, it's a "big contract", and, whenever anyone puts a big contract in front of you for signing, it's a sure bet that it's been structured with their interests in mind, not yours, and that they are very aware with what they can use in the contract to protect themselves in an unexpected situation. And these times — lockdowns, restrictions, and supply problems — tick all the boxes when it comes to "unexpected situations". The bank probably deals with this situation a dozen times every day, and it may well sweep away your worries with a simple extension — either the amount or the time frame — to your loan (another contract!) so don't panic quite yet. But, if you don't get much satisfaction from that quarter, your best bet is to go to a solicitor, and have him look over all the contracts to see how you can emerge having lost as little as possible. Good luck!

  • donkcat on 05/12/2021 - 12:08

    As others said you need to speak to a lawyer. My concern for you is this is the first week after you paid the deposit, what wasn't feasible a week ago but is now? What is happening to you is happening to many others however it's happening because building isn't commencing for 6 to 12 months after they sign their contract it means that many of the materials have gone up in price several times over the course of that time frame. When is your build commenced to start? I worry your builder is going to have their hand out for more money several times more over the course of your build.

  • Webber000 on 05/12/2021 - 13:24

    It sounds like this could just be the start of your problems and you need to be very careful.
    If you already asked the builder about this before and he said it would be fine, and now he has taken your deposit and just 1 week later told you he needs more money then you need to be very careful. Can you trust him? Will he ask for even more money next month (especially if he finds you can get more money now after just 1 week)?
    If you signed a contract with him then it will clearly say what you and he must do. Its true that prices have gone up a lot - but he already knew that because its happened all year and its not new. Is this guy going to keep telling you he needs more money or is he going to keep making up stuff like you will have to pay for delays - when it is him that is changing the price not you.
    Think very carefully if you can trust him. Did you check his references? If you didn't then check them now - a lot! Maybe it would be best to see if you can cancel and go to a builder who you can trust? Maybe everything will be fine, but also maybe for the next 2 years you will have lots of problems with this guy and you will never get your house finished or it will be so poor quality it will not pass inspection and you won't be able to live in it.

    • birobiro13 on 05/12/2021 - 18:24

      Thanks mate yes. Thats the most frustrating thing for me . Qe purchased a land and home package witch we used our 15k grank into the land and all my deposit into the land as well. Then it has been 4 weeks since he submitted all paperwork to council in order to start building and last week as part of building bank sent him 16k deposit. And then a week later this happen. My worry here is the 15k home and land grant can only be used if building. I cant pull off other wise I maybe liable to pay the 15k to government as well. Its all signed we signed it all in November. My toughts are like yours prices have been increasing but this price was given to me 2 months ago so he should knew what pruces are then. Under fair trading yes I got a contract and he gotta build it but i wish was easy just like that lol.
      We did check all reviews and being honest he's 5 start every reviews and search we dont. The building company done big jobs and complexs as qell no issues on any. Just frustrating really.

  • screensaver on 06/12/2021 - 00:31

    Make sure you have all insurances in place in case he goes under, and ask to see proof he paid his insurance. Someone was on a current affair, the builder never paid the insurance premium

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