Construction Loans
Whether you're looking to build a new home or to do a construction on existing property then a construction home loan is for you.
How Do Construction Loans Work?
If you’re thinking about building or substantially renovating your home, you may need a construction loan. Normally a construction loan let’s the borrowers draw on the loan balance to make the payments made to the builder. These payments are made a key stages of the building process (also know as progress payments).
While the construction loan still in progress, you will only be make the interest repayments on money that has been drawn down. This means that you will only be paying interest on money that been used. Therefore, repayment will be smaller at start of your loan, and will be increase gradually as the construction approaches to completion.
Normally, constructions home loans have a variable rate with a maximum LVR of 95% (varies depending between lender). They also have different criteria and timeframe on when the construction needs to be complete by. It’s worthwhile to speak with a mortgage broker to help navigate lenders to find you the ideal construction loan for you.