Expert tips to get the best mortgage valuation | Amy Beattie, Good Green Home Loans

Want to hear the mortgage valuation process explained?

What do you do if your property’s zoning has changed since you purchased? 

And did you know that banks and lenders can black-mark specific postcodes which makes it difficult to access finance?

Learn more as Amy Beattie, Mortgage Broker, helps us understand.

In this video, I speak with Amy Beattie, Mortgage Broker and owner of Good Green Home Loans. 

This is part 5 of my conversation with Amy. You can watch Part 1 here and Part 2 here and Part 3 here and Part 4 here.

Good Green Home Loans is here to help you find the right home loan at a great rate – using only environmentally responsible lenders who aren’t using their profit and power to support the fossil fuel industry.

In this video, I asked Amy these questions:

Many people may have bought land some time ago that has since been given a bushfire overlay. What do you suggest they do in regards to reviewing the finance options for building a new home on that land?How do you see banks black-marking specific postcodes or areas, and on what basis?

So let’s dive in.


Amelia Lee + Amy Beattie (Good Green Home Loans)

[Amelia Lee]: In terms of, you know, what we were talking about earlier, some people may have bought land that now isn’t necessarily of the value that they might have paid for it, it might not have climbed in its value as much as they expected. It’s had the bushfire overlay.

[Amelia Lee]: They, you know, even I know some people who’ve owned land since pre 2009, when all of the rules were different. And they may or may not want to build a property on it and and now having to sort of navigate those different hoops and those different requirements than when they bought the land. what suggestions do you have for them in terms of thinking about finance and ascertaining if there’s going to be a gap

[Amelia Lee]: I suppose that just avoiding that surprise of, am I going to need extra cash to come up with? Obviously the research is one thing, is there? I mean, do you how do you suggest people sort of do that researchers of establishing value Do you have specific recommendations for people in terms of how they kind of established the value of the project?

[Amy Beattie]: You know, many banks will allow you to just order an upfront valuation without going down the finance side of the the assessment side of things at all, and they might pass that valuation cost on to you if you don’t proceed with something. And, but sometimes they don’t. And so you, you basically be wanting to go to your broker or direct to your bank and asking if they are able to do an upfront valuation for you. So you know exactly where you stand from a value point of view before you embark on your project, ultimately, so. So, so yeah, that’s that’s the short answer to that one.

[Amelia Lee]: And have you seen that scenario where people have you know, they’ve held land for some time they thought it was worth x. It’s not Sort of that, I suppose that balance and juggle of the project planning and how to obtain the finance that they ideally need to make that project happen.

[Amy Beattie]: I’m not really because it’s, you know, when it comes to property prices, the house haven’t really had many bumps, you know, in my lifetime. So, you know, land values have have been maintained for the most part historically. So these little kind of blips in values have just happened so infrequently. It’s it’s a really unknown space, I guess, and even more so now in the current climate. So it’s one of those things I guess, if, if, if you’re planning to do something with your land, you really need to be going and speaking to the experts sooner rather than later and getting valuations done.

[Amy Beattie]: Because who knows what’s gonna happen with property prices at the moment? So finding out the number and getting the answer that those upfront answers to your questions early is the best advice I can give. But no, I haven’t I haven’t seen that. I have I’ve, I’ve seen the odd, you know, off the plan purchase that’s come in and lower than was expected when, you know, the valuation was done three years before the project finished. But it’s a completely different kettle of fish. So, so no, not in relation to land. I haven’t specifically had to help somebody in that situation. Yeah, it’s gonna be more common.

[Amelia Lee]: Yes. And I suppose the only scenario that I’ve really seen it in is where a developer may have had a large subdivision, they’ve sold off early blocks to individual purchases, and then a builder may have come in and bought a, you know, section of 15 sites or something like that to do a punch of home and land packages, yet have been given a lower price per block of land as part of that deal, which is impacted the value of other sites in the development.

[Amelia Lee]: And, and so when it’s come to the point of financing, that’s then meant that there’s been a cash gap for the individual purchaser expecting that they would had better equity in the land to then be able to refinance and build the property on so it and I think to the bushfire overlay, it’s interesting to say I have not, I’m trying to think if I’ve seen any scenarios where it’s diminished the value of a property, but oftentimes those those sites that do have bushfire overlays, they, oftentimes in areas that have either great natural resources that improve the value of the property, or they’re in areas where they’re, the views are things like that, you know, maybe incredible or there’s other aspects that are Kind of prop up the value of the property.

[Amelia Lee]: And the bushfire overlay is just a constraint to deal with with construction, but not necessarily a constraint to deal with in terms of the valuation assessment. So, yeah, it’s quite interesting to say, but I think it is that thing of unless you’ve, you’re constantly saying across what are the constraints and zonings on your property, it can be a nasty surprise, when you go to the pointy end of kind of working through that project plan and finding out Hang on.

[Amelia Lee]: This wasn’t here five years ago, if you have been holding on to some land for some time, I’ve known people that have had land for a decade that they bought for, you know, peanuts or something like that. And yeah, it’s in some beautiful kind of remote location. It’s always been the plan to build a holiday shack or something. And yeah, and the area is full of holiday shacks. And unfortunately, Now none of them make code and so yeah, it’s a very tricky scenario.

[Amy Beattie]: So yeah, but again to that, like, the banks will have different rules around those things. Some banks will wipe out an area, just by Based on postcode, and there isn’t even a necessarily although maybe they weren’t provide you the reason why that postcodes wiped out. But it might be that it’s a mining area, and there’s it’s propped up by that industry, which is, you know, potentially not going to be a strong thing, you know, something that’s positive anymore. So, so speaking to a broker, who knows, with the breadth of banks that they’ve got access to that particular bank doesn’t bias based on postcode or doesn’t bias based on a particular overlay, and we’ll look at each transaction on its own merits means that with all of the banks that we’ve got to choose from, there’s very likely to be one that can help you.

[Amelia Lee]: So does that happen? Does it banks have got particular postcodes that they just won’t offer mortgages in our particular council kind of conditions that they won’t offer? Where do you say that sort of like you mentioned, the mining is there the sort of scenario That you see that happening in?

[Amy Beattie]: Well, you know, in places like the Docklands in Melbourne where there was, you know, the supply and demand factor and then also quality of builds and that type of thing meant that property prices there changed drastically, I guess from from the point of purchase for lots of people to not far down the track.

[Amy Beattie]: So, yeah, absolutely. And and all banks generally have also, most banks generally have a tool where you can go in and plug a postcode and it will spit out it, yes, we can talk to you. I know we can’t, and you don’t necessarily understand the factors behind it. And honestly, even with the mining factor, you’ll one bank will say no, and five banks will say yes, and it’s just about the risk appetite of the bank and, you know, whether they’re balancing their overall assets and what type of assets they want, and not Talking about the property assets that I’m talking about you as a client, they’re trying to boost their lending books, they might open, their postcode ranges, just simply because they want some strong borrowings overall and the postcode is one factor.

[Amy Beattie]: But if they’re borrowers with strong financial positions, the postcode doesn’t matter. So there’s, like you said at the start, there’s a cocktail of factors and, and it’s it’s dynamic, it’s changes daily. my inbox is just often emails from Bank saying we’ve changed this policy or change that policy or, you know, and there’s so much to keep abreast of and even sometimes, I won’t know what bank I can find that can help you until you come to me and present your circumstance and then I have to start doing the research for you. Because it just changes so often.

[Amelia Lee]: That’s fascinating. I’m thinking like this kind of back end, kind of Room have spreadsheets with all of this data in it, yes and knows against it and, you know, wish that it was transparently available to everybody to access because it would be it’s quite fascinating that it’s it’s not just about the risk profile of that particular area. But what the bank’s agenda might be in terms of its larger portfolio and its reporting to shareholders and its you know, balance sheets, and what it might even from a marketing position or a brand positioning want to be seen to be doing compared to another bank like that. That’s incredible.

[Amelia Lee]: It’s weird to think of all those permutations are going to impact you when you come with your individual house on an individual lot and say, Hey, I need some money. Yeah, and it’s like it’s got to fit into this kind of data stream of of yeses and noes in in one banks particular profile and portfolio. That’s just incredible.

[Amy Beattie]: Yeah, absolutely. And it’s and there are spreadsheets that exist like that. And you know, when you first approached me about taking part in the podcast, I, you know, the first thing I did was go to some of those spreadsheets and type in bushfire and the word doesn’t come up in the spreadsheets. So, you know, straight away that was saying to me, it’s not affect us specifically that the banks assess risk on, you need to dig further. And the further you dig, it all just comes back to that person’s individual circumstances and all of the different risk factors and hopefully, how many fall into the low risk category versus the high risk.

[Amelia Lee]: Yeah, it’s, it’s funny because you could get quite despondent about that and think, well, I’m never going to be able to know all of those puzzle pieces and then on the flip side, you can get quite made quite buoyant by it to go Okay, well, what I’ve got to do is just get what I can control in order, and what I can impact sorted in terms of my deposit, my knowledge, my Understanding I, you know, I had a friend for when I was at university who was a complete real estate junkie. And by the time we’d all finished uni, he’d already invested into one bedroom properties whilst we’re all spending our money on it.

[Amelia Lee]: But I’ll never forget him saying to me never send a valuer in blind amilia always be you know, fully informed about what you want that valuation to be and give them the homework you’ve done, to set them up to understand what you’re seeking to achieve. And so every time we’ve had a property valued, I’ve done a lot of that research and real estate background information and, you know, you go to your agent and get them to look at our pay data for you and, you know, all that kind of stuff. And it’s quite, it’s quite interesting because it’s such a significant asset and it’s such as in a renovation or a build is such a significant spend.

[Amelia Lee]: But so many don’t know those pieces of research to do or feel like they’re going to just have to pay for that extra information. But so much of this you can access through conversations with talented professionals who have your best interests.

[Amelia Lee]: Hot, you know, someone like you who’s can just then lay out to them. Okay, these are the risks. Can you say what you look like? I mean, at the end of the day, you’re a number to a bank. And this is what your number looks like. Yeah, what do we need to do to make your number look better and look less risky as a as a, as an option for the bank.

[Amy Beattie]: Exactly. And sadly, um, you know, with people directly affected by the bushfires. They’re not in a situation where their dream they’re dreaming about something they want in two or three years. It’s something they need help with now. So it’s, it’s not quite that simple on that side of things, but absolutely, that’s that’s exactly right. There’s, there’s so much in your control to drive the outcome. It’s just going to be a bit of time and effort and it doesn’t have to be cost.


This interview is part of our Rebuild + Build Better series.

Be sure to stay tuned as we share more information and expertise in helping you rebuild after bushfires, or build homes more resilient to climate conditions and in bushfire prone areas.

Resources mentioned in this video:

Get in touch with Amy here >>>
The post Expert tips to get the best mortgage valuation | Amy Beattie, Good Green Home Loans appeared first on Undercover Architect.

Buying Land in a Bushfire Prone Area + Getting Finance | Amy Beattie, Good Green Home Loans

So you’re buying land in a bushfire prone area? Or renovating a home in a bushfire prone area? How do you get finance? 

Learn more in this video about what lenders will look at, and what you need to consider when applying for finance in your new build or renovation project.

In this video, I speak with Amy Beattie, Mortgage Broker and owner of Good Green Home Loans. 

This is part 4 of my conversation with Amy. You can watch Part 1 here and Part 2 here and Part 3 here.

Good Green Home Loans is here to help you find the right home loan at a great rate – using only environmentally responsible lenders who aren’t using their profit and power to support the fossil fuel industry.

In this video, I asked Amy these questions:

What are some of the considerations you need to make when purchasing land in a bushfire prone area, to set yourself up for better chances with your finance applications?If you’re renovating an existing home in a bushfire prone area, what will lenders look at to see if you’re viable for borrowing for your project?

So let’s dive in.


Amelia Lee + Amy Beattie (Good Green Home Loans)

[Amelia Lee]: Now, in terms of purchasing land in a bushfire prone area, what do you need to consider in terms of setting yourself up to have a better chance for with your finance? If you’re looking … This is a thing, like we’ve … The recent bushfires, there’s speculation that more land will be zoned with bushfire overlays. People might have been looking in an area previously in the last five years that might have had a bushfire overlay added to it.

It’s quite surprising some areas that are bushfire, do have a bushfire overlay. There’ll be places in suburban Sydney that might be near a thin sliver of National Park that then have a bushfire overlay on them, that becomes a big surprise during sort of people’s due diligence.

How do you suggest that they set themselves up so that financing doesn’t become a problem in that scenario?

Yes, it’s a tricky one. Because often you’re, you know, you’re looking at land and you haven’t even started to go down the path of them constructing on that land and that project itself … And if the construction project doesn’t match the land’s requirements from a building and planning perspective, then you’ve … if you’ve gone ahead and bought the land, then you can’t do what you want to have as the final project. You’re in a tricky situation so …

A very expensive caravan park, yes!

I think sometimes when I’m driving around different parts of the area that I live, I’m in Melbourne, the morning can potentially you often see fences up around blocks, and they’ve been there for a long time. And it’s like we almost got started here and then it all came to a halt.

[Amy Beattie]: So again, it’s that RESEARCH-RESEARCH-RESEARCH factor, but when it comes to buying land, it’s definitely knowing and understanding the restrictions of the Council, and all of the overlays.

And anything that you can find out, you know, even if that’s whether it’s heritage, cultural overlays, bushfire overlays, there’s many different things that can affect whether you can do what you plan to do. So it’s… take your time, don’t jump in because of the view from the land.

Yes, I guess it’s a simple… It sounds like a very simple answer, but that that’s it. You really need to be fully aware of all of the restrictions so that you can figure out whether you can work with them or not.

Yes, and I think too, it’s that thing … The bank’s going to find that out anyway, because the bank’s going to do that as part of their due diligence of valuing the land, so you might as well be ahead of the game, and know that information before you start asking for money to purchase it.

Yes, absolutely. And you know, you can’t think of them as two separate transactions. You have to really have a pretty clear idea and pretty well researched project for the build before you buy the land.

So again, that can be tricky because you’ve got a real estate agent saying, you know, ‘I’ve got three buyers looking at this, and it’s probably going to be gone tomorrow’. It’s hard, it’s impossible to say don’t get caught up in the emotion of all of that. But if you do, there’ll potentially be really significant consequences.

So take your time, there’ll be plenty of land. And there’ll be another one, trust me. I guess I probably … I say that a lot. And it does feel like sometimes I’m the person that people don’t want to hear what she has to say, because the news isn’t all just rainbows and baby animals.

Just a dream killer in your part time! It’s alright, I often feel like that too. When homeowners come to me and say ‘oh, I want to do this, and this is how much money I’ve got to spend on it’. And it’s like… Those two things are a long way from each other. And yes, you do (feel like a dream killer) …

[Amelia Lee]: But I always feel that my attitude is, and I can imagine it’s your experience too, is that even though you’re the deliverer of bad news, you know it’s news that is much better heard early, rather than another 12 or 18 months down the track when you’ve already – when you’ve invested significantly more money, effort and energy. And that it’s always possible to dream a new dream, and one that actually is true.

[Amy Beattie]: I love that.

[Amelia Lee]: And one that actually fits all of the criteria rather than just a couple. And the new dream that fits all the criteria often actually ends up being a better dream.

So for me, it’s… I see that time and time again that there’s always that horrible, demoralizing initial moment of disappointment, because there’s been so much banking on this working out. But inevitably once everything else gets into alignment, I’d say it generally always creates much better results in the long term.

The sooner you can get to that point of ripping off the band aid and finding out the bad news, the better. Better armed you are to not waste any more time.

[Amy Beattie]: Spend all your effort in the right areas or the new areas that you need to.

[Amelia Lee]: Definitely. Now in terms of looking at renovating in a bushfire prone area, obviously there’s going to be similar considerations. But with these a lot of people would have bought houses that aren’t up to code. And as part of renovating, they need to bring the entire house up to code, which may be a bigger spend than what they initially bargained for.

How do you see that relationship with the lender, the assessment of risk? And the conversation about what their spend of the project is to get the result that’s required from a code point of view, from a value point of view, all of those kinds of puzzle pieces coming together.

[Amy Beattie]: Yes, the bank still uses all … Is still assessing all of the same things. So it’s going to be about the balance between how much you spend and what you’ll have at the end, when you’ve spent that money. It’s going to be about the increase in the loan repayments and your comfortability with that. And the impact of those increased repayments on your family and your lifestyle, and is that something you want to sign up for? Or whether you have to think about walking away. There’s all the same things to consider.

It comes down to, again, speaking to the finance experts early so that they can help you work out what your potential hurdles will be. And with those hurdles, what ones you can mitigate, and want to mitigate and want to therefore pursue, or what you don’t. And when you know… Where you cut your losses.

So it’s not really too much different, to be honest. The best place to start will definitely be where you currently have your finance, because that bank is already involved in the risk, so they’ll want the property to be back to being saleable and a risk free property again. Sooner rather than later.

So they’re going … They may well … And all banks will have a level of this, where they’ll be willing to go, and able to go outside the black and white rules that they would normally be bound by, because this is already a property that they have a mortgage over and have some skin in the game. So, in that situation, you’re probably best to start with your bank because they’re more likely to have to help ultimately.

I think too … What I see is really interesting with the renovating piece, it’s almost… It’s quite different to the building new, is that there’s a bit of a chicken and egg process where you’re sort of looking at ‘okay, we’ve got this property, we’ve got this existing house, we might have X amount of equity in it. We’ve got capacity to extend our financing all things being equal to Y. That means that we’ve got this amount of money to play with in terms of renovation’.

[Amelia Lee]: Now we need to do a little bit of work in finding out ‘okay, what is the constraints on our property? And what … Invest in some consultant help to look at what does the bushfire overlay mean, what does that mean in upgrades to our house? What does that mean in terms of have what that money might bias and where that money might need to go? And then is that money then enough? And does that look like what we kind of need to get as a finished picture?’

And it can be really tricky for people because that feels like they’re actually having to spend a lot of time, and make a lot of decisions, and speak to a lot of people, and potentially pay some professional fees to get to that point of going ‘yes, okay, now we can do the thing of applying for the additional finance and hiring the architect or hiring the designer, or speaking to the builder in a more formalised sense’.

You actually have to do a fair amount of due diligence to even get to that point, particularly when you’ve got a bushfire overlay and you’re doing a renovation because different areas will see the work that you have to do to the existing house differently. And in some cases that may actually be more affordable for you to demolish the existing house and build a brand new house that meets code rather than you trying to up spec the existing house to the standard that it needs to be.

Do you see people sort of really struggling with those early stages of ‘how much work do I need to do to get to the point where I’m like… Why can’t somebody just say yes or no to me? How much work do I need to do to suss this out? When am I doing too much research and disappearing down a rabbit hole?’ You know, all of that kind of work.

[Amy Beattie]: Well, I mean, from my side of things, the conversation always starts around ‘how much can I borrow? How much will the bank lend me?’ And it’s a little bit risky sometimes to sort of just stop there and say ‘it’s this number’, only to find that the client takes that and literally runs with it, and ends up doing so much more than maybe they would if I just sort of said ‘why don’t you do your research about the cost first, and then we’ll work to that’.

So yes … I haven’t personally assisted somebody in that situation where they’ve had damage from bushfire and just needing to, or wanting to, get back to the house they had before. Or something similar or maybe something with a few nice improvements. You know, in my role it’s about talking through those … But also asking lots of questions so I can work out what type of client I’m speaking to here and whether if I tell them the number the bank is likely to say yes to they’ll just run with it and spend more than they wish they had. So it’s a balance of all those things, too.

Yes. It must be really interesting to try and assess that … Because you’re dealing with money mindsets and attitudes to money and attitudes to process and those kinds of things at the same time as…

I need a psychological exam first as well! Just to see strengths and weaknesses! So absolutely it’s multi layered, and I’m very … I become emotionally invested in the transaction with the client too. I always do. So sometimes, the more you get to know them, the more invested you are as well. But I wouldn’t, you know, I wouldn’t do it any other way.

[Amelia Lee]: Yes, that’s gorgeous. That’s the kind of broker I’d want on board too! You want somebody who’s gonna celebrate with you or commiserate with you!

[Amy Beattie]: Ride the highs and the low!

[Amelia Lee]: For sure.


This interview is part of our Rebuild + Build Better series.

Be sure to stay tuned as we share more information and expertise in helping you rebuild after bushfires, or build homes more resilient to climate conditions and in bushfire prone areas.

Resources mentioned in this video:

Get in touch with Amy here >>>
The post Buying Land in a Bushfire Prone Area + Getting Finance | Amy Beattie, Good Green Home Loans appeared first on Undercover Architect.

How to Avoid a Building or Renovation Nightmare: 4 Real Life Stories

What happens when renovating or building goes wrong? And how do you avoid the 5 and 6 figure blowouts?
When we stuff up renovating or building, it rarely involves tens or hundreds of dollars. More often than not, it means thousands, tens of thousands, and sometimes hundreds of thousands of dollars extra. Do you sometimes wish you could take a renovation course to avoid your money gurgling down the drain? (Hot tip – you can take one right here!)
For many things in our lives, we can correct our mistakes. Have another go, and do better next time.
Yet, when it comes to building or renovating our family homes, most of us only do it once or twice in our lifetimes. The expense is big, the decisions are permanent, and the choices we make become the home we have to live in – good or bad.
The fear of stuffing it up, and regretting the choices make (that are screaming at us daily in our homes) is real.
Especially when you hear the horror stories. 
Here are 4 real-life renovating and building horror stories, and tips to help you avoid these situations on your project.
#1 The homeowner and her family, whose builder went into liquidation during the renovation of their home.
This family moved into an apartment to make way for the renovation of their family home.
Things were progressing well enough, until they weren’t. The builder seemed to be falling behind. Sub-contractors were complaining that they weren’t getting paid. One threatened to come and pull out all the work he had done on the project. The builder kept stalling, kept saying things were going to be fine. The owners started paying the builder’s progress claims directly to the contractors to ensure they got paid. It was increasingly become a serious mess.
The builder went into liquidation – not only on their project, but on all projects he had underway at the time. Building literally stopped overnight. The project was already running behind. So what happened next?
After hiring lawyers to deal with the insurance claim and the aggressive receiver, they still had a half-finished home and were paying rent on a unit.
It took them some time to find another builder willing to take on the project, and the new builder quoted $50,000 to rectify the previous builder’s poor quality work. As well as several hundred thousand more dollars to finish the project.
Just like that, their budget blew out by double.
Fortunately these homeowners were in a position to fund the project to completion. However, you can imagine the additional stress this has put on them, and the frustration with delays and legalities of dealing with a liquidation and insurance claim.
And whilst the builder lost his license as his company went into liquidation, he is now operating under a “Qualified Supervisor Certificate”. This means he is unable to contract directly with consumers, but can be the nominated supervisor on a residential project for someone else’s building company.
Tips to avoid this for your project:

Once a builder is on your site, terminating a contract can be difficult and onerous. So, ensure you ask LOADS of questions before you contract your builder. Questions about the history of their licenses, whether they’ve had licenses cancelled (in any capacity), and whether any of their staff have had licenses cancelled.
Be ready to manage your project diligently, or have someone do it on your behalf. This includes checking payments, seeing that paid invoices have actually been paid. Occasionally it can be worthwhile checking on presented invoices to ensure that payments are actually being made as claimed. Any good quality builder will not resent you checking in on this.
And if your preferred builder isn’t ready to start on your timeframe, question whether the alternatives are as desirable. This builder was not the preferred builder, but one that all parties (designer or owner) had not had experience with before. They chose him because he was ready to start on their timing. The job has ended up being far more delayed than if they’d waited for their preferred builder to start.

#2 The homeowners who spent money on and time with a design team for months on a proposal to convert their garage into a granny flat …
These homeowners hired a team of designers to design and document the conversion of their garage into a granny flat. When they submitted it for a Complying Development Certificate, Council reject the application because it didn’t meet planning codes, and the garage isn’t structurally sound.
They are now reviewing the agreement to determine what recourse can be taken with the design team to reclaim their fees and council application costs. And they’re looking for another designer to assist with getting the application done properly.
This has meant wasted time, money and fees on professionals who didn’t do their job well, and now have to be legally pursued for fee compensation.
Tips to avoid this for your project:

Review your consultant agreements in great detail, whilst imagining the worst-case scenario. On review, these homeowners find that their agreement is missing some key information regarding necessary due diligence during the process that would have caught this issue much earlier.
Before considering the conversion of any part of your home, or adding on (say a second storey), get structural advice as to whether its even possible. This will save you any headaches with the design process.
And also get an understanding early of your local planning laws. A simple check with your local council will often reveal some some key information for your property. Or at the very least, it will arm you with better questions when you first get your design team over to start your project.

#3 The homeowner who decided to do an owner-builder extension to save some money.
This homeowner got quotes to renovate and extend their home, but found it was well over their budget. They decided to take on the project as an owner-builder.
However, they didn’t know how to check off that work was being completed to the required standard. They moved back into the project to save some money when the first stage was finished, and turned on the plumbing. It hadn’t been sealed properly, before the walls were lined. So, the plumbing exploded, the walls and floors got damaged.
They sought quotes for a builder to rectify the damage, and finish the project. Quotes were at least another $200,000 over what they planned to spend. Unfortunately, because the whole project took longer than they anticipated, they’re nearing the end of their approval period. Getting an extension is difficult, so they’re backed into a corner to find the funds and get the project finished.
Tips to avoid this for your project:

Seriously consider whether owner-builder is a good approach for you. Many homeowners say to me “I’m really organised, do you think I could do an Owner-Builder?” However, if you don’t know what you’re organising, it won’t necessarily help that you’re organised.
Build in a contingency for any project. Things can and do go wrong, and so having some spare funds to cover it will help you manage your risk overall.
If doing an Owner-Builder project, consider hiring a building inspector, or someone who can assist with checking the work of trades, and ensuring components of work are completed to required standards. If you have no building experience, it is very difficult to know what you’re looking for in finished work.

#4 The homeowner who hired a friend to design and manage their project.
The friend got busy, didn’t attend site as regularly as originally planned.
The builder didn’t do their job well in one area, and the project started leaking and deteriorating.
THREE YEARS LATER, they’re finally taking legal action against the builder after trying every other avenue to resolve the dispute, and get the work fixed at the builder’s cost.
They’re also hiring another builder to fix the issues. More money and a huge amount of wasted time.
Tips for you to avoid in your project:

Hiring friends and family is fraught with risk in any project. I prepared this video to explain some of the issues you can face, and that you should seek to protect yourself from. Both for the sake of your project, and your friendship!
These homeowners tried to do the kind and non-legal process for three years. We can wait far too long to speak up about our dissatisfaction, and as a result the situation gets far worse. The minute there is something needing addressing, deal with it then and there. It will prevent it from becoming a much bigger issue down the track (and everyone feeling far more resentful in the process).
Document everything. Keeping track of conversations, instructions, and errors at each step of the way. You will have difficulty remembering everything, and a paper trail will assist when any further action is required in disputes.

These are but a smidgen of the horror stories I hear from homeowners reaching out to me to ask “What do we do now?”
In Undercover Architect, I’m not one for the horror stories. It’s not my normal style to share all the scary facts about building and renovating. I’d much rather help you get inspired, motivated and confident to get it right in your project – and teach you what you need to know.It is however, hard to ignore: stuff-ups in renovating and building are rarely in the $100s or $1000s. More often than not they are in the $10,000s and $100,000s. Stuff-ups that derail projects, cause financial stress and impact how and where you get to live.So how do you avoid the 5 and 6 figure blowouts? Simple. Get informed and prepared. You being a super savvy homeowner is your biggest asset – and Undercover Architect is your secret ally.
The post How to Avoid a Building or Renovation Nightmare: 4 Real Life Stories appeared first on Undercover Architect.

Important tips for Home Mortgage Loans Process | Amy Beattie, Good Green Home Loans

Want some important tips for your home mortgage loans process?

Construction loans require specific considerations, which may impact how you go about your project.

Watch the video to learn more about what is involved when financing your home renovations or new build. 

In this video, I speak with Amy Beattie, Mortgage Broker and owner of Good Green Home Loans. 

This is part 3 of my conversation with Amy. You can watch Part 1 here and Part 2 here.

Good Green Home Loans is here to help you find the right home loan at a great rate – using only environmentally responsible lenders who aren’t using their profit and power to support the fossil fuel industry.

In this video, I asked Amy what do you need to consider with financing, and reviewing construction loans for new homes or renovations.

So let’s dive in.


Amelia Lee + Amy Beattie (Good Green Home Loans)

[Amelia Lee]: When we’re looking at construction loans for new homes or for renovation projects, what do people need to consider when thinking about their finance? You’ve touched on some things already. Is there anything that might trip people up or that they might not be aware of in terms of understanding that construction loan process and how that might work for their project?

[Amy Beattie]: Yes, so for me it only comes down to one really key thing and that is lots and lots of research. And being really informed on sales, the market that you’re building in or renovating in, and current information on comparable properties and understanding what comparable properties mean.

Because, unfortunately, building to the highest standard of BAL level, again it comes back to that very first question, doesn’t necessarily translate to a property that’s more highly valued by the bank, with the method that they use for valuing properties.

But in all honesty, in terms of when you put your property on the market for sale as well, buyers don’t necessarily, or will be not necessarily willing to pay as much as you did to get it to where it is when they’re looking to buy it. And especially in the circumstances where somebody has experienced hardship, they have to sell their property for financial reasons and therefore need to sell quickly, you’re very unlikely to recover the costs.

So that’s the biggest one, it’s understanding the market early, before you’ve even begun your project, to understand what the value you’re likely to be limited to is going to be, despite what you believe your property’s valued at the end. So that’s the big one.

And when it comes to comparable, that’s things like number of bedrooms, number of bathrooms, floor size, block size, location, and quality of the work which is all of these extra things you’ve put the money into, they’re important. But a home that’s been constructed cheaply can look very nice and be sold quickly by the right agent with a wonderful wide lens camera and the gift of the gab.

So it doesn’t, like I said, it doesn’t always translate. So lots and lots of research, and I’m a spreadsheet queen. So you can only imagine when I’ve been out there looking to buy property or even dreaming about my own dream home eventually. I’ve got a spreadsheet full of comparisons. And you know, it’s not going to be necessarily your property that the bank’s value will align to, it’s going to be what sold.

So yes, that’s the big one. What else… The other thing was just that contingency side of things because if you watched an episode of Grand Designs, let alone every episode of Grand Designs, even the best laid plans are very unlikely to be perfect despite lots and lots of research, because there’s just little things that you can’t control, and that come up. There’s things you can control too.

But having spare money that is not assigned for the landscaping at the end or the fence, or the little things that you think ‘we’ll fix those up with the spare money, the contingency’, you need the contingency to be for that unknown things. And you’ve got to be really realistic about how big the contingency bucket needs to be. And I would say it needs to be nothing less than sort of that 10 to 20% realm. You would probably know better than me that that one.

[Amelia Lee]: And is there anything else that people need to consider as part of that? I know that one of the things that many people get surprised about, and I often talk to them in terms of that actual process, is that the bank needs to see their building contract. And be able to see what the payment, the progress claims are.

And in the work that I do with helping members inside my online courses, it’s really about saying to them, you need your bank to look at what those Progress Claims are, what the definitions are, and so that you’re all on the same page about what you expect to see finished on site at each of those progress claims, so they don’t get caught out with, say, Lockup Stage. And the bank has one definition for what Lockup Stage means, but the builder has another definition.

And it means that the progress claim … That the bank refuses to pay the Progress Claim until the builder has done more work, and the builder is saying ‘Well, no, this is what the Progress Claim is for and I’m not going to do more work until I get paid for that one’.

How do you navigate that process when somebody is about to go and get a construction loan, and you know that they’re needing to sign a contract with a builder and sort of pulling all that information together to give to the bank to get certainty around that?

[Amy Beattie]: Yeah. So there’s… It’s twofold I guess. The banks will, for the most part, only work with a project that is a fixed price contract. So if we’re not talking about a fixed price contract, you’re almost certainly going to find it very hard to get financed unless you’ve got lots and lots of equity.

So, fixed price contract. Your contingency, which is completely separate from the budget entirely that the bank is working with, if that’s enough to cover every progress payment, then the main thing that the bank will want to say is that when they get to a particular point of a project, sorry, a progress payment, is that that work has been done.

If you pay for the work in advance with your contingency, then the bank will refund you for the work that’s been done. So again, it comes back to that. If you’ve got the contingency, then if the bank says they won’t release the money, you can use a contingency to do that, and then be refunded by the bank so that it completely mitigates that.

But I’ve had so many conversations over the years, I’ve been writing or helping people get home loans for sort of 15 years. The amount of times that I hear at the start of a project a client’s say how much they’ve heard progress payments by the bank, it’s a nightmare and the banks just make it difficult. Ultimately it’s difficult because they don’t want you to find yourself in a position where you’ve said ‘go ahead’ to the builder, and he’s done a whole bunch of work that shouldn’t have been done yet that he’s spent money on when he shouldn’t have because that wasn’t part of the contract.

So when the bank is being really nitpicky at the start before they release any money, it’s to avoid you finding yourself in a tricky situation with the builder, like that. So yes, I think it might be tricky at the start, but if the bank is doing everything right, you won’t find yourself in that position.

[Amelia Lee]: Yes, that’s fantastic. You know, my other business Live Life Build, we talk to builder members about the importance of actually having the homeowner present the contract to their lender, and getting a letter from the lender that they’ve seen the contract, that they agreed to the progress claims, so that you’ve got that documentation up front.

Particularly when you’re working with a broker, sometimes, some brokers don’t manage the communication as well. And so that stuff can fall through the cracks. But it’s just that case of understanding and getting all your ducks in a row right up front.

Because obviously, once construction starts happening, the last thing you want to experience is delays because somebody’s not paying a progress claim, or there’s difficulty around getting money to where it needs to go. That’s when things cause real headaches. So to get… Just to spend that, obviously that extra time in those upfront stages is so crucial to things then running smoothly.

[Amy Beattie]: And talking about the things that can go wrong at the start so that you can plan for when going wrong, and be ready, I guess.

[Amelia Lee]: It’s great.


This interview is part of our Rebuild + Build Better series.

Be sure to stay tuned as we share more information and expertise in helping you rebuild after bushfires, or build homes more resilient to climate conditions and in bushfire prone areas.

Resources mentioned in this video:

Get in touch with Amy here >>>
The post Important tips for Home Mortgage Loans Process | Amy Beattie, Good Green Home Loans appeared first on Undercover Architect.

Home Loan Mortgage for Bushfire Prone Areas | Amy Beattie, Good Green Home Loans

Is a home loan mortgage for bushfire prone areas any different to a home mortgage in other areas?

When renovating or building in bushfire prone areas, there are certain things to consider in proving your case to a mortgage lender. 

Amy Beattie is a mortgage broker, and can tell us more about financing your home renovations or new build.

In this video, I speak with Amy Beattie, Mortgage Broker and owner of Good Green Home Loans. This is part 2 of my conversation with Amy. You can watch Part 1 here.

Good Green Home Loans is here to help you find the right home loan at a great rate – using only environmentally responsible lenders who aren’t using their profit and power to support the fossil fuel industry.

In this video, I asked Amy these questions:

Is borrowing for properties in bushfire prone areas different to standard borrowing?What do you need to consider when understanding your risk factors for financing?

So let’s dive in.


Amelia Lee + Amy Beattie (Good Green Home Loans)

[Amelia Lee]: Are there specifics to know when it comes to financing for bushfire prone areas in terms of understanding the different BAL ratings, the Bushfire Attack Level Ratings, and what that might mean for how much money you’ll be able to access? Or what deposit you’ll have to save up in terms of the difference in how the finance, the bank, might see your risk levels? And how much they’re willing to.. What percentage of the property they’re willing to finance?

[Amy Beattie]: Yes, so the percentages of the property they’re willing to finance are definitely crucial overall when you’re in that zone of kind of 70% or 80% plus. You’ve got mortgage insurance costs that will be added to your loan, and there has to be room under that percentage that we’re talking about, for the cost of the insurance.

So 90% is probably about where the total cost of your project needs to be capped. Including a contingency of unknown bucket of money for unexpected expenses. Because then when you add on the mortgage insurance, the total loan ends up being 92%, 93%, 94%. 95% is the limit, generally speaking, for most banks. And many won’t go that high. So you really begin to reduce the different bank options you’ve got to choose from.

So 90% is definitely the top end of the total project, including contingency. And banks don’t specifically talk in terms of BAL ratings directly. So, you know, those kinds of … So the scale of the BAL rating doesn’t really matter to the bank as such.

But banks assess the overall risk of the property itself in the valuation, and that risk analysis is about seven or eight different risk factors. And generally for the risk factors, the scale is 1 to 5. Where 1 is low risk, 5 is high risk.

And the more numbers 1, 2, 3 you can have, and hopefully, the majority of the risk factors are numbers 1, 2, and 3. Then if there are numbers 4 and 5 in there that are related to bushfire, again, the bank is weighing up everything. So if they can mitigate the bushfire risk by an insurance policy that covers the bushfire risk, then they’re not going to be so hung up on those risk factors when all of the others are strong. So again, it comes back to that overall picture, definitely.

When you’re borrowing under 70%, and up to 80%, you also take out a layer of the mortgage insurance company being involved and their whole new set of policies having to be met, or their criteria having to be met. So the bank has to answer to the mortgage insurance company who says, ‘yes, we will insure this loan for you’., or ‘no, we won’t because of these things…’

And the policies of the insurers vary substantially. So, again, another reason why you need to get your mortgage broker involved early is so you can find the bank that has the mortgage insurer that has the policies that work with your particular circumstances. So it’s very complex.

[Amelia Lee]: That’s really interesting to understand those kinds of risk criteria and the different layers that the bank will assess that by. So, you know, if your property is a BAL Flame Zone, some people may think that that means that it’s going to be impossible to finance. But from the sounds of that, it sounds like it’s actually just how it sits in all the risk factors that the bank is going to assess as part of that combination.

And if you’re only borrowing, say, 70% of the property’s value, and you’ve been able to calculate that once it’s got a house on it built to flame zone, that you’ll mitigate the risk and those types of things… Am I understanding that that means that you actually stand a better chance?

[Amy Beattie]: Absolutely. So you won’t find it impossible just because you’re a BAL, the highest level of BAL risk grading. Everything else about your application will then be scrutinised. And if it’s strong on all of those other levels…

And we’re talking about if you’re wanting to build, and in order to build you need a 30-year loan term, but you’re 65 years of age… The banks, it doesn’t matter what the flame zone is, that’s not a position that the bank wants to put anyone in financially. So everything else has to be considered. But if it’s strong in all of those other factors, the flame zone won’t matter, as long as it can be insured.

[Amelia Lee]: Yes, it’s quite interesting actually, to sort of remember that this is … It’s a cocktail of different ingredients, that it’s not just okay, a blanket statement of ‘you’ve got a property with these zones on it, it’s going to be impossible. It’s like actually, if you’re committed, it’s a case of knowing that you can be financially sound in those other areas, that you can have a sufficient deposit. And yes, you’re following those avenues of…

I know, being self-employed for so long, the property purchasing that we’ve done, we’ve always had to be geared at a much lower rate than if I was employed. But that then has enabled us to be able to argue the point in terms of our ability to pay back the loan and those kinds of things and achieve the mortgage outcomes that we needed. Because we just knew the rules. We knew what we needed to do in terms of…

[Amy Beattie]: Exactly. So again, that’s what your broker’s there for. And, you know, you go to your broker and the best thing you can do, or your bank if that’s how you do it, you go directly to your bank… You literally have to put all your cards on the table, and you have to speak openly and honestly, so that the banks can do the right thing by you, knowing the full picture and assess it thoroughly.

So, you know, sometimes, as a broker, I feel like I need to sort of poke and prod to get the full picture from people because they’re nervous about saying, ‘Oh, you know, there’s this that’s complex, or there’s this that’s a bit tricky’, but the more open and frank you can be about the full picture and answer all the questions that are thrown at you, the better chance the brokers got, or you have of finding the right bank that is willing to help you out.

[Amelia Lee]: Yes, and I always found that a much easier conversation to have with a broker than with the bank manager. Because the last thing you wanted to do was throw red flags.

[Amy Beattie]: Exactly. And that’s the thing when you go to a bank manager of one bank, who has one set of rules that he has to live by with every client, the moment you say… I don’t know, ‘it’s a bushfire prone zone’, the moment he says ‘sorry, we won’t finance a project that’s in a bushfire zone’ and you’ve completely ruled them out. So if you go to a broker, you tell them everything, they can just help you go straight to the right bank that they know accepts those tricky parts of your circumstances.

[Amelia Lee]: That’s fantastic advice, Amy.


This interview is part of our Rebuild + Build Better series.

Be sure to stay tuned as we share more information and expertise in helping you rebuild after bushfires, or build homes more resilient to climate conditions and in bushfire prone areas.

Resources mentioned in this video:

Get in touch with Amy here >>>
The post Home Loan Mortgage for Bushfire Prone Areas | Amy Beattie, Good Green Home Loans appeared first on Undercover Architect.

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