In this article, you will learn how to:

  1. Represent a construction loan with a “cost to complete” program (multiple drawdowns over a period of time), and

  2. How best to track this within Trail!

Representing the Loan

Once you have the agreed fixed price contract as well as the final property valuation based on market value, you can begin your process in Trail.

In this example, we’re applying for a loan of $600,000 for construction fees, but the property has a final valuation of $800,000.

1. Create a ‘New Purchase’ mortgage application (assuming you are not performing any other tasks with this application).

2. Under ‘Properties’, add a new property to be purchased.

Enter the address, and under ‘Value’, you want to specify the market value (or the value after the build is complete). Fill out the intention, and state that it is a ‘New Development’ under 'Existing Property'.

3. Select the property to be purchased.

Select the property to be purchased. We want to use the final valuation figure when calculating our LVR. However, this does mean that our ‘Funding Required’ will be our final valuation figure, which isn’t correct. We'll fix that.

4. Offset the lending required using ‘Deposit Paid’ or equivalent.

We now want to offset the lending required to gain the construction amount, not the market valuation. To do this, we can add the offset amount (in this case it is $200,000) to the ‘Cash & Equivalents’ section. In this example we’ve put it in ‘Deposit Paid’ but it can be in another field.

Don’t worry, whilst this may not be true, you can use the ‘Notes’ page to explain this to the bank.

5. Select your security and check your LVR.

Now that you’ve got the correct construction amount, select the property (and any other properties, if you have any) and check out your LVR figure.

6. Create the servicing structure.

7. Use the 'Notes' page to your full advantage.

Since this isn't your usual mortgage application, there will be questions the bank would like to ask. To be prepared for this, and to help explain the different stages of drawdown throughout the construction loan, use the 'Notes' page to explain everything.

All notes appear in the application to the bank.

Keeping Track of the Drawdowns

Since construction loans drawdown over a long period of time, it’s hard to ‘win’ the opportunity and follow the usual process in the pipeline. You also may want to keep track of each drawdown amount, so how do you do this?

NOTE: You will require admin rights to achieve this, as you will be editing the mortgage advice pipeline.

1. Pipeline Stage Tracking

This part is up to you, but what you will want to do is create a new stage (or stages if you wish) in the pipeline to store this opportunity during its construction lifetime. Here’s a guide on how to add/remove stages to your pipeline.

Below is one example of what you could add:

Move your opportunity to the appropriate stage when the lending is confirmed.

From here you can use these stages to track construction loans and have a place to manage them.

2. Reminders for Drawdown Dates

Create activities within the profile to track each drawdown date or any other relevant activities in relation to the construction. Here’s a guide on how to add activities to a profile if you are unsure.

If you want, you could create your own activity type specifically for these cases. Here’s a guide on how to create custom activities.

Below is an example of some activities related to a construction loan.

Using these you will be notified close to the due date and will be able to see upcoming activities in your pipeline and activities page.

3. Completion

Once the construction loan has come to a close, you can then win the opportunity!

Here’s a guide on winning mortgage opportunities.

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