Construction Loans can be quite different to a standard home loan so it is important to understand what you are entering into.
The Construction Loan is a loan that is drawn down in stages as your property is being built. This means that your monthly mortgage repayments slowly increase as the construction moves forward until finally at completion of construction the loan repayment reaches its full monthly repayment amount.
Many Lenders also offer interest only repayments during the construction process which revert to principle and interest repayments once
the construction is complete.
To qualify for a Construction Loan you will need to have council approved plans and a fixed price tender from a registered builder. You should also note that you will need to use your saved funds or equity before drawing down on your Construction Loan.
For many building contracts a progress inspection at every mortgage loan drawdown is arranged by the Lender. Always check with your Lending Manager if you would like to make any variations to your building contract, prior to proceeding.
Upon completion of your property, the Construction Loan usually reverts to a standard variable rate.
This is general information only.
Which is why it is essential to speak with a construction lending specialist, providing new landowners with peace of mind and a successful outcome.