body>Adding an extension to your existing home to add extra space and room can be a great idea: you get the house you want without the aggravation of moving. You may be considering adding a couple of bedrooms and a bathroom, or perhaps building a granny flat for mum and dad (or for the kids to move in to).
Most people unlock existing equity in their home to achieve this by taking an extension home loan.
Can I Get A Loan For An Extension?
The most common types of building extensions that the banks will lend towards are:
- Swimming pool
- Adding on a bedroom and/or ensuite
- Adding a story
- Any type of construction that will add value to the property
The primary criteria for an extension is value addition. The bank will conduct a valuation to confirm that it does this, and then loan against that valuation.
Are The Interest Rates More Expensive?
Most lenders will charge a higher rate for an extension home loan. There are, however, a handful of lenders that will offer competitive interest rates on an extension home loan. There really is no reason to pay more, so contact Building Loans Australia to see what options are available to you.
How Much Can I Borrow?
For an extension home loan, you can borrow up to 95% of the valuation of the property. In many circumstances you may already have some equity in the property, in which case there would be no out of pocket expenses.
When extending a home the costs do tend to blow out a little so we normally recommend factoring in a 5-10% buffer to allow for this. If there is sufficient equity in the property we can allow for this in the extension home loan.
Why Use A Specialist Building Mortgage Broker?
Many banks will refuse extension home loan applications, or simply don’t offer them. They are expensive to set up and administer, with progress payments, council approvals needed, and extra valuations required. Building Loans Australia specialise in this area, so you can be sure you get the best deal available.
What Do I Do Next?
Before signing any fixed price contracts it is important to arrange a valuation on your existing property and obtain a pre-approval. Building Loans Australia can take care of all of this for you, and even work with your current bank if you would prefer to stay with them. Contact us today to find out more.