Banking issues??? Ideas

[EXP]

We are building a new home on land we own, old house is gone, new foundations in place and subfloors on
we are appoved by the bank for more than enough money
build has registerer Alberta new home warranty on the homes
Bank has looked at builders contract and did not have anything to reply against it
problem now is I have paid builder to start the work which he has ,no problem.
Bank now is saying they will not release funds until work gets to a certain % and than will release said amount of funds
Builder says he has worked with the same bank but a different person and has funds released before and as work is in progress to get materials and
pay labours.
We have been going in circles for a week trying to deal with this, in the mean time no work is getting done.
What might my options be, fire the banker and get a better person to handle the account
look for a new bank?
I need to get this project moving so I need to get this sorted
I release that with out seeing the contract its hard to have the right answer but I am just looking for ideas and maybe something might work
Thanks

[clover168]

Re: Banking issues??? Ideas

Go talk to your lawyer.

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[witchcraftz]

Re: Banking issues??? Ideas

This is a common issue, the builder wants money ahead of time to pay for hours and materials and the bank won't release money because until something is built there is no collateral.,

Talk to your bank, this can't be the first time they are financing a construction.

[Mitcheh]

Re: Banking issues??? Ideas

When building a custom home, every lender I've ever worked with will advance funds in different stages (the stages may vary from lender to lender).
As it stands you should be eligible for a first advance since your foundation is complete. This would normally be 15% of the total cost to build, less a holdback.

Feel free to PM me, or email mitch@mortgagemitch.ca if you want to chat (I am a mortgage broker).


Edit: also should note, the different "stages" of completion may vary depending on how much equity you're injecting (5% of completed value versus 20% of complete value, etc).

[witchcraftz]

Re: Banking issues??? Ideas

Good info Mitch, I'd been wondering much you could get released myself.

[EXP]

Re: Banking issues??? Ideas

We will talk with the bank manager and hopefully it will get sorted out asap.

[EXP]

Re: Banking issues??? Ideas

We have met with the Manager, 2 times, He admits the first guy may have not finaced us for enough, and also says the contract is now a problem with them not in so many words, so he suggest 1 of 4 things, cash in your RRSP's, stop building one and finish one first and sell, renegotiate with the builder {because the bank did not really see the part about how the builder is on a cost to build, put money into an account and he uses it to build, so far no problems with the builder, and last sign one title over to the builder.
well the last 2 don't really work for me as he is holding up his part of the contract no troubles.
They forgot one more- I think we now talk to a Lawyer about what options we can take against the bank.
mean time we are in a rental house with holes in the ground trying to build 2 homes one to sell and one to live in, being a long time 25 year client of this bank they will not take any responsibility
for the corner they have backed us into.
sorry to ramble on but as you may have guessed I am alittle pi$$ed off.

[Mitcheh]

Re: Banking issues??? Ideas

I'm still open to taking a look, if you want. Sounds like you're dealing with inexperienced bank reps which is very common. It's not too late to kill the mortgage with the bank and start new.

Mitch@mortgagemitch.ca

[EXP]

Re: Banking issues??? Ideas

pm'd

[clover168]

Re: Banking issues??? Ideas

Hey EXP if you need a lawyer I have a very good one for you