If you are considering building your new home on existing land or renovating or extending your current home, you’ll need construction finance.
What Is A Construction Loan?A construction loan works differently to normal mortgage financing, and can be used for a number of different house building objectives.
While the amount of finance required will be agreed upfront, it is only released in line with a pre-determined timetable. Effectively, the lender will release tranches of financing as each stage of the build is completed. For the investor this has the benefit that interest payments are only made on the portion of loan released – you only pay interest on the amount you owe. (Take a look at how construction loans work.)
When You’ll Need A Construction Loan
Construction financing is necessary for a number of situations, and can be used to either finance your dream home or an investment property, extension, or renovation projects including:
- You already own the land and you wish to build on the land to live in
- You wish to purchase a house and land package
- Investment construction for an investment property
- Off the plan construction
- Home Renovation Loan
- NRAS Property home loans
- Owner Builder Home Loans
- Extension Home Loan
Before You Obtain A Construction Loan, Beware!
Lenders attach different clauses and features to their construction loan policies. Some will offer policies to borrowers with otherwise insufficient documents, others may offer 95% loans, for example. However, before rushing to sign on the dotted line, it is imperative that you understand all the clauses attached to the policy.
Some lenders may insist on valuations being conducted at every stage of the build before the next tranche of money is released. This could mean financing not being extended, but will definitely mean payments being delayed by a few days. If the builder has penalty clauses in its contract with you, you may find yourself having to pay additional charges you weren’t banking on.
Other lenders may restrict what outside quotes are allowed to be financed. For example, driveways, landscaping, and floor covering, to name but a few. Select the wrong lender and you could find yourself forced to use the builder for items that you could source elsewhere far cheaper.
Why Use Building Loans Australia?
With extensive experience, a finger on the pulse of the market, and access to the lenders that specialise in this market, you can be certain that Building Loans Australia will find the best construction home loans for your needs, especially from within the following niche categories:
- No Deposit Construction Loans with family as guarantor
- 95% Construction Loans (genuine and no genuine saving options)
- Construction Pre-approval home loan
- Low Doc Construction Loans
- Discount Home Loans for 75% and 80% lends
When you need a construction loan structured to your specific situation and needs, we’ll help you find the right lender and the right policy. Contact Building Loans Australia today and access the best construction home loans available on the market.