If you’ve thought about building a new home but the idea of paying your mortgage AND the rent while you wait put you off, then we have good news!
Construction loans make it easy.
How do they work?
Unlike normal home loans, construction loans start out small with interest only payments and increase in stages (known as progress payments) as the building of your home progresses. Progress payments are usually paid to your builder after different key phases of building are completed. These key phases include:
- Slab down: This is when the concrete foundation of your home is laid.
- Frame stage: This is when the frame of your property is built.
- Lockup stage: This is when the external walls, windows and doors of your home are in place and your home can be ‘locked up’.
- Fixing stage: This is when the internal and external fittings of your home, like cupboards, gutters and electricals are installed.
- Completion: This is when the finishing touches are added and your home is ready for handover.
Progress payments mean that until your home is ready to go, you can keep more of your money free to pay your rent. Once building is completed your loan will work like any other home loan with principal and interest payments.
Is a construction loan harder to get than a mortgage?
Construction loans have a different structure compared to conventional loans, at least until the home is built, and for this reason the application and approval process is different. Whilst it’s not necessarily more difficult to get a construction loan, the steps involved are different. We can help guide you through the process and get your started on your home ownership journey.
How do I qualify for a construction loan?
Different eligibility requirements apply for a construction loan compared to a standard home loan. You’ll need to provide your lender with proof that you are building a home – this usually includes your signed building contract, insurances and council plans and permits. You will also be subject to normal lending criteria around your income and expenses. Ready to find out if you qualify? We can help!
What are the benefits for homebuyers?
Construction loans give you the flexibility to build the home of your dreams, without breaking the bank. The main advantage of a construction loan is that they’re clever progress payments mean that you can continue to pay your rent and other bills whilst building is underway. This removes the financial pressure of getting into your first home and makes the building process no worries. Are you ready to start building? Get in touch with us today to find out if you qualify for a construction loan.
We can help you apply.