Construction Loans
How does a construction loan work?
Construction Loans can be for a new home build or for a major renovation, and repayments are generally interest only during the build and will revert to interest and principle repayments once the build is complete.
Construction loans are different to normal home loans in that the amount you have borrowed increases during different stages of construction
The lender will pay your builder after each stage of the build, these stages typically include a deposit, slab down, frame, lockup, fit out and completion.
You will generally need the following additional documents (on top of the standard lending documentation) to qualify for a construction loan:
Council plans and permits
Building plans
Proof of land/house purchase
Signed building contract and the builder’s insurance
The lender will also send a Valuer to the build site to provide a valuation of the to-be-completed home - once this is complete the normal home loan qualifying process takes place.
How much can I borrow?
If you would like a complementary review of your current finances to see how much you can borrow for a construction or renovation, you can contact me at luke@happyloans.au, on mobile 0411 104 117, or return to our home page and click on the start here button to register your details.
