While buying an existing property has its advantages, sometimes you might just want to start from scratch.
Building a property is not easy, but when it all comes together there is nothing more rewarding than seeing your brand new home or investment take shape –from the foundations to the last roofing tile.
Funding the cost of building your new home, as well as the rent you’ll need to pay while you wait for the construction to be completed, can be a heavy burden. But fortunately, it doesn’t always need to be.
A building or construction loan provides funding for building or extensive renovation while minimising repayment amounts during the first year of the construction period.
Most construction loans work on a variable interest rate basis and during the construction period you will only be required to pay back the interest on the amount you have drawn down for that particular stage.
The construction of your home will usually be completed in five stages: laying the base/slab, erecting the frame, lock-up, installing fixtures/fittings and practical completion. At each stage, your builder will submit invoices to be paid. Once you have inspected the work and are happy with the result, your lender will pay the builder directly from your mortgage.
The lender may also revalue the property during construction to ensure it is on track to meet the targeted valuation.
As the repayment amounts will vary depending on what stage of construction your home is at, it is important to keep in contact with your lender to discuss ongoing payments throughout the entire process.
Once construction is completed, the loan will convert to the standard loan that you and your lender have agreed upon.
The major benefit of a construction loan is that you don’t have mortgage repayments due while you are unable to live in the home. This means you are still able to afford rent and living expenses while building your home.
To find out more about construction finance and how it can help build your future give us a call today.
