Construction Loans

In general, construction home loans have a variable rate, with a maximum LVR 95%. This varies depending on lenders, therefore it is something worth speaking to your mortgage broker about. Lenders also often set a maximum timeframe for the complete draw down of your loan, usually around 6 months. If you are not planning to start building right away, you may need to purchase the land on a separate land loan.

The construction home loan process

Application

Boost your chances of approval by knowing what’s required. Much like a traditional home loans, your lender will have a look at your income and savings, to judge your capacity of repayment. However, additional documents will be needed for a construction loan, such as a fixed price building contract, building plans approved by Council, a copy of your builder’s licence, etc.

Making progress payments

Once your loan is approved, funds will be provided in a series of payments. These will be made at various milestones of the building process, outlined in your building contract. The six stages of construction are typically the preparation, followed by the slab (or base floor), frame, lock up, fit out and finally, completion.

Home is complete

Before making the last progress payment to your builder, your lender will inspect the property and need a few last documents for a final valuation. Once the final payment is made, your loan will switch to the standard home loan or loan package that you have agreed upon.

You are now free to move in!

Celebrate with friends and family, and make a fresh start in your brand-new home!

Would you like to learn more about Construction Loans?

Contact us on 0431 080 470 or info@speddingfinance.com.au or fill out our contact form and we will be in touch.