We’d encourage them to leave a “buffer” to allow some flexibility. Through that they’ll be able to work out what kind of builder they want, which may result in some changes from what they originally had in mind.

There are other things that pop up regarding prices, but we haven’t had any issues of builders going out of business. That’s because we do have strong relationships with great builders with a strong backing.

At the end of the day, it is usually price rises that are an issue, so we do ask clients to try and speak with the builder, and include any changes in their financing at the beginning rather than them being hit with issues down the track.

Adam Burstein, principal, Core Finance Co

Educating clients on what to expect

Now, more than ever, we work on educating clients on what to expect. First and foremost, we encourage clients to consider only those suitable lenders that have reliable construction lending policies.

From there, we take time to explain the importance of detailing as many inclusions or exclusions as possible to simplify any subsequent contract. Some clients try and carve out items that can be quite significant in getting a property to practical completion, which can create significant hurdles.

We encourage clients to understand why it’s important not to sign a contract that is significantly “front loaded” with progress claims or has a high number of claims – it’s a possible red flag from a risk perspective and lenders dislike it.

A quick outline of differing contract types (e.g. fixed price, cost plus ABIC/Simple Works Contract, etc) can also help alleviate significant problems for borrowers at the formal approval stage.

Above all, we encourage clients to be patient and keep their eyes open.

Clinton Waters, director, Axton Finance

Give them construction fact sheets

As brokers, we can’t control the market or builders, but we can prepare clients to navigate the landscape.

With construction lending, we often find that most clients have similar questions and concerns.

We provide clients with construction fact sheets that explain building insurance schemes in case the builder goes bust, how progress payments work and other FAQs.

We also consider lenders that don’t have strict drawdown times, in case there are unforeseen delays.

Another point is to anticipate price rises. We tend to build a 10- 20 per cent buffer into pre-approvals to provide peace of mind if prices change.

Finally, we’ve invested in tight workflows for managing progress payments. This is all part of the overall client experience and helps ensure we remain efficient on what may be modest loan sizes.

Craig Vaughan, director, MAP Home Loans

Ensure they have contingency funds  

You pretty much need to have contingency funds of at least 10 per cent of your bill costs to be able to feel comfortable in being able to complete your build.

I’ve had a couple of clients who have presented a fixed-price building contract and there’s been an exemption to say they’re authorising the builder to pass on any increase in material costs for materials.

Gone are the days where you can put a first-time buyer into a build when you know it’s [simple]. It’s now not a fixed-price building contract, because extras can be presented to the client to pay in the middle of building a property, even when they don’t have any slush funds.

Karen Le Comte, director, Smartline Cleveland