When does the bank give me the money to pay the builder?
As the work progresses, the Rigger or the Architect draft what is called a Certificate of work progress. This certificate shows the percentage of the work that has been executed at that time.
If for example:
there is executed 35%; the bank would give the owners 35% of the amount of the mortgage granted but … This is NOT as it is!
What is the initial retention?
The reality is that the bank always keeps a percentage of initial retention that will not pay you until you have the License of First Occupation issued by the City Council. Usually this retention is around 10%, but it can reach up to 20%.
In other words, if 35% of the work is executed, the bank will only provide you with 25% of the mortgage amount (calculating retention of only 10%).
What can happen if you do not do this, is that people are working that take a long time to collect. And believe me, we all like to charge for the work we do.
What is the final retention?
There is another problem. The bank also reserves the last 10% of the work executed as retention. Nor will he pay it until he has the First Occupation License. Think that since the work itself is finished, until the City Council issues the License of First Occupation, it is necessary to carry out the Final Work Certificate and endorse it in the Professional Associations of Architects and Quantity Surveyors. These procedures usually take several weeks.
In a work of € 150,000, with 10% initial retention and 10% final retention, there would be € 30,000 that you will not collect from the bank until a couple of months after finishing the work.
And we all like to charge for the work we do:
The problem of falling short with the mortgage
I think that once the previous point is nuanced, it is evident that the “working capital” in which we have converted your savings will serve to absorb possible imbalances between the initial forecast and the final expense, either by modifications of the projected or by potential changes in qualities during execution.
However, I always recommend asking the maximum possible amount of money to the bank. It is clear that today they will not give you anything that you do not deserve. If at the end of the work you have money left over, blessed problem! An installment is made, and we subtract it from the mortgage.
Also, defining the project very well and taking a detailed calculation of the expenses that are made (through the certifications mentioned above) helps the final price does not trigger us.
It is evident that the fewer savings you have to make your home, the more conscientious you will have to be with what you spend and the better-defined everything will have to be in the project.
The problem of estimating, halfway through the work, that in the other half you will spend less than expected
This is a fairly common mistake. It is about making an economic analysis in the middle of the work (for example, after having executed structure, enclosures, and roofing) and observing that, for some reasons or others, the cost is skyrocketing.
Most people do not assume that difference in spending and trust that in the rest of the work the expense will be less than expected. And this is rarely like that.
If half of the work you learn that you have spent more than expected, you must take it and try not to happen again in the rest of the work. But yes, do not intend to recover the extra money invested in the first part of the work, because that will never happen.
The problem of estimating living conditions of departure and that at the end of the work, these have been altered
From the initial idea of making a house until the action is executed, it takes a long time. Rarely less than 3 or 4 years. Also, it usually coincides in the range between 30 and 40 years, when many of us are given to have children and our priorities change.
It is possible that you have always wanted to have a pool table at home, but when you finish work, you prefer a toy room for your new child.
It is possible that the idea that you had to gather all the colleagues every weekend to do theme parties has faded with time. The same now you value the tranquility of a sofa.
The same thing about the pool was not such a good idea, considering that its maintenance is quite expensive.
Against this problem, there are not many solutions. Perhaps being aware of the changes that your lives could have in the coming years. Maybe designing polyvalent spaces that adapt to the family’s evolution.
That special corner
Although the house has been great for you, you may not find “your own” self in it. I explain. We all need a corner in our home to relax and isolate ourselves from the world.
This magical place can be a small terrace with a sun lounger and a little shade. It can be your study-library, with that reclining sofa so comfortable. Maybe it’s a high-chair breakfast on the island of a kitchen.
Everyone should look for their place in their home. If you do not project it, search for it once the work is finished. But find it, because that little corner will give sense to all YOUR HOUSING.