Understanding the difference.
A construction loan is a type of home loan designed for people who are building a home or doing major renovations, as opposed to buying an established property. It has a different loan structure to the type of home loans used to buy an established property.
A common feature of a construction loan is a progressive drawdown. You receive installments of the loan amount at various stages of construction rather than receiving it all at once at the start of the loan period. A number of lenders offer construction loans that are interest-only during the construction period and then revert to a standard principal and interest loan.
Gaining approval for a construction loan is a different process to applying for a standard home loan on an existing property. In addition to being subject to normal lending criteria and income and expense documents, banks and lenders normally require you to provide documents including council plans and permits, a copy of your fixed-price building contract and any applicable insurance (such as public liability insurance and builders all risk insurance).
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The application process is also different to a standard home loan. The lender may consider the expected value of the property upon completion of construction, as well as the total amount required to pay the builder. An independent property appraiser will then typically estimate the expected value of the property when completed. The lender will typically also require further valuations and inspections during the project.
With so many wheels in motion, we are able to ease the stress of the construction loan process and ensure that the requirements are in place to make financing your project seamless.
Our commitment to you.
The relationships we hold with our clients are enduring, a compatibility made possible through an understanding of your ambitions and priorities.
In a partnership with us, you can expect to:
- Save time and energy as we streamline the process
- Be empowered with knowledge
- Enjoy the freedom of choice
- Find the right loan structure which benefits you in the long run
- Avoid options with hidden penalties, fees and inflexibilities
- Be supported by us throughout this process, and any future goals
