What do mortgage brokers do when your builder goes insolvent.

In the face of a challenging landscape for the building industry, where rising inflation & interest rates, global supply chain issues, extreme weather events, and staff shortages have created a perfect storm, the risk of a building company going insolvent is a very real concern. According to the Australian Securities and Investment Commission (ASIC), a total of 2,213 Australian building companies entered into liquidation in FY23, underlining the need for clients to be vigilant and well-prepared.

We understand the gravity of this situation and are here to guide you through it. 

1.Securing your Loan

The most straightforward solution if your builder faces insolvency is to keep your existing loan intact. Fortunately, this is a viable option if you are able to secure another builder promptly to complete the project. Once a new building contract is in place, we liaise with your lender to update your loan application, ensuring your financing remains intact.

2. Adapting to Changes

In certain cases, changes in valuation or personal circumstances might render your existing loan unsuitable. If this happens, we step in to help you secure a new loan tailored to your evolving needs. We understand that these changes often come with increased costs. We negotiate with your lender to adjust the loan amount if possible, sparing you the cost and difficulty of resorting to personal loans or borrowing from family members.

3. Financial Buffer and Contingency Planning

At the outset of setting up a construction loan, we emphasize the importance of having a financial buffer. We advise all our clients to maintain a buffer of at least 10% of the construction costs. This buffer acts as a safety net, covering unforeseen contingencies. Proper financial planning and foresight can make a significant difference during unexpected challenges.

Our Commitment to you is to help you through it. 

While builder insolvencies have decreased more recently as construction costs and interest rates have stabilised, construction projects inherently involve risks. We are here to guide you through every step.

We value long-term relationships with our clients, and our commitment goes beyond professional obligations. We genuinely care and wouldn't have the heart to see you struggle. Your financial security and peace of mind are our top priorities.

I love construction, so I am very interested to hear about your plans. Get in touch for a chat. 

Warm Regards, Marisa