What You Need to Know About Construction Loans

When it comes to applying for a construction loan in Australia, there is plenty of choice. But with that plethora of choice, there is still the need to do your research to sort out the good from the bad and with so many potential lenders to choose from, it’s a great reason to hook up with a professional loan specialist to help you weigh up the positives against the potential negatives to find a construction loan that’s ideal for you.

What is a construction home loan?

It’s a type of home loan that is specifically designed for people preparing to build a home, rather than buy an established property. With the unique needs of home-builders in mind, construction home loans operate under a different loan structure than home loans designed for people purchasing an existing home.

Typically, a construction loan includes access to a progressive draw-down facility. Simply speaking, it enables you to draw down the loan (or increase your borrowing) to pay the construction progress payments, as needed.

Just how much is available to borrow depends on what the value of the property will be when construction is complete. It’s standard for a construction loan to be interest only throughout the first 12 months of the loan’s lifetime (or until construction is completed), before it reverts to a standard principal and interest loan after that.

To help you understand what’s on offer and how to find a great value construction loan, here are some basics you should know:

How progress payments work

Once approval for your construction loan is confirmed and the construction of your property commences, your lender will make progress payments throughout the key stages of construction........ read more here

Thanks for reading my blog, I hope you found it interesting. For more information about applying for a construction Loan, please feel free to contact me on 03 8805 1800 or email at [email protected].

Barry