We are here to assist you in securing funding for your new construction project or renovation.
Obtaining a construction loan is a pivotal step for individuals embarking on building their dream home or undertaking significant renovation projects. Construction loans are tailored to release funds incrementally as construction advances, rather than in a lump sum upfront. Securing a construction loan can be intricate, as apart from assessing your financial position, banks typically require comprehensive information about the build before granting approval. We can guide you through the process, ensuring all necessary documentation is in place before initiating the application, thus expediting the commencement of your project.
Construction loans diverge from other types of loans in how funds are disbursed to pay builders and suppliers during the construction phases. Consequently, you only accrue interest on the funds utilised rather than the entire loan amount. Understanding the mechanics of a construction loan and how it facilitates building or renovating is critical, and our expertise ensures that you grasp the intricacies involved and secure the most suitable loan for your needs.
Construction home loans typically come with higher interest rates compared to traditional mortgages due to the increased risk lenders take during the building process. It's essential to understand the terms, such as whether the interest rate is fixed or variable, and how the loan will transition into a mortgage or require repayment after construction is complete. Some borrowers may also benefit from an interest-only repayment period during the building phase.
Unlike traditional loans, construction loans are paid out in stages of construction, known as "draws," which correspond to specific milestones in the building process. It’s crucial to be familiar with the progress payment schedule and ensure that your builder’s timeline aligns with the loan's structure to avoid delays or financial gaps. The final payment typically occurs once construction is complete.
Construction projects often come with unexpected costs due to delays, material price increases, or changes in plans. Having a contingency fund as part of your construction home loan can help cover these unforeseen expenses without derailing your project or putting additional financial strain on you. This safeguard ensures your loan amount can accommodate unforeseen challenges.
2024 / Mortgage Brokers Co. Jackson McCarthy is a credit representative (488785) of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237)
Disclaimer: This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does notconstitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
