Construction Lending

• KYC (Identification and proof of address)
• Income verification – bank statements from the last 3 months are required if salary is not deposited into HSBC
• Approved plans from The Department of Planning (Government Bermuda)
  
• 1 Contractor’s quote (customers are able to obtain more than one in order to compare, however the bank only requires one) The quote should include a detailed description of work being carried out, a drawdown schedule and estimated project time frame
  
• Owner Supplied Material quotes – The Bank requires all costs to be factored in, including items not included on the contractor’s quote
  
• Quantity Surveyor’s Report- The QS report is critical to the application process. This report is to be provided by an independent qualified quantity surveyor, who will assess your plans and provide a detailed summary of the total project costs, including contingencies and preliminaries. Lending is based on the final total presented within the Quantity Surveyor’s Report. Any differences will be the responsibility of the borrower
  
• Appraisal – Customers are required to select an appraiser from the Bank’s panel of appraisers. The Bank will order the appraisal on your behalf. Costs for this initial appraisal will be the responsibility of the borrower. Approved plans from The Department of Planning will be required at this time in order for the appraiser to determine the “As Is” and “Upon Completion” value
  
• Minimum of 10% Cash Injection Plus Legal fees – the Bank will lend up to 90% of the project cost and as such, a 10% cash injection is required by the customer. It is also recommended that the customer maintains 5% for any potential cost overruns. Evidence that the customer holds an additional 5% is required, however funds do not have to be held within HSBC
  

Additional documentation may be required once the application is successful. The Bank will hold security in the form of a First Legal Mortgage, or a Deed of Further Charge. The Bank will then send instructions to the external Legal Counsel of your choosing (Legal Firm must be on the Bank’s Legal Panel). 

Your new Construction Loan facility will be set up on a draw down schedule. This means the Bank will only make approved funds available upon your request. Interest will only accrue on the amount that has been drawn down (funds extended).

• written request specifying the amount of draw down
• invoice(s) to support this request, outlining what the funds are needed for or what stage of the project the draw down request is covering
• invoice(s) should indicate payee account details. The Bank will remit payment for payee accounts held with us. Funds for payees that are held at other institutions will be credited to borrower servicing account, whereby payment remittance will be their responsibility
• the final drawdown request should be presented along with the Occupancy Certificate
• a final “Upon Completion” appraisal will also be required. The cost of this appraisal will be covered by the Bank. This appraisal is necessary in order for the Bank to confirm the value of the property security being noted, aligns with the initial appraisal

Drawdown payments are usually processed within 48 business hours.