Construction Loan
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If you are an Owner Builder - Use the link below... |
What is a Construction Loan?
A Construction Loan is a short-term, interim loan for financing the cost of construction. At the end of the construction term, your loan reverts to a standard loan or fixed loan of your choice. The lender makes payments to the builder at periodic intervals as the work progresses.
If you’re building a new home or planning major renovations to your existing home, a construction loan is generally the most appropriate funding option.
The difference between a construction loan and a standard home loan is that instead of a lump sum payment at agreement signoff, the loan is usually drawn down in stages. Payments (or draw downs) coincide with the initial purchase of the land followed by a number of key construction stages.
Which type of mortgage is best?
Selecting the right construction mortgage may depend on a variety of factors.
- Standard Variable Rate
- Fixed Rate
- Offset
- Line Of Credit
- Discounted Rate
- Go Between
- Relocation
- Credit Impaired
- Low Doc
With a low standard variable interest rate, redraws at no additional cost, the choice of monthly or fortnightly repayments, and the freedom to make additional repayments when you want, you can start your project with confidence. You can also elect to fix your rate at at no additional cost.
IMPORTANT INFORMATION
Not all lenders offer a construction loan facility. If you are buying a block of land to construct at a later date, make sure the lender offers this facility otherwise you may have to refinance when it come time to commence construction.
This means that irrespective of being in a fixed rate loan or a variable rate loan, you can leave that lender by paying their indicated break fee. It is often the case that break fees are less than the benefits received by switching to a better home loan product.