Construction Home Loans

Construction Home Loans

A construction loan allows you to have the full funding in place for the construction of your home/investment property, or for major renovations. The loan is then progressively drawn for each phase of construction:

• Purchase of the land/existing property.
• Deposit on build contract.
• Base stage (floor – also known as ‘bearers and joists’ for wooden floors).
• Roof stage (usually including frames).
• Lock up stage.
• Final payment.

During the construction phase, your repayments will be interest only. This means you only pay interest on the loan as the balance progressively increases.

A construction loan will typically need to be on a variable rate, however you can split the loan and have the initial (land purchase) portion as fixed rate. After the construction is complete and the loan is fully drawn, you can decide to put the rest on fixed rate.

We’ve found that while most banks have construction loans, some are better than others. This typically relates to fees and interest rates. Our view is that this money is better in your pocket than theirs, so we’ll find the best option for you.

Leg Work

There is additional documentation required for a construction loan as the bank will require a fixed price build contract, confirmation of construction insurance, and council approved plans. Also, the builder will require confirmation from the lender that funding is approved prior to commencement of works. We’ll coordinate on your behalf with the bank and builder as needs be, and stay hands-on right through to completion.