Construction Loans
Let Zanda Wealth Mortgage Brokers help build or renovate your dream home.
We’ll set you up with financial protection and reduced interest for your home construction project.
What are Construction Loans and How Do They Work?
When you think of home loans, a construction loan is not the first loan that comes to mind.
And quite frankly, it should be as there are many advantages to a construction loan in comparison to other loans. Construction Loans are typically offered to borrowers building a house upon a plot of land that they own.
They are also offered to borrowers who are doing renovations to their home.
Construction loans differ from regular home loans in the fact that with construction loans, you get portions of the money at a time versus everything in one go with a regular home loan.
This is quite similar to the construction industry as contractors are paid as they reach certain milestones on the project, thus this is how construction loans are paid out to you upon approval.
The differences and structure of construction loans require a trustworthy and accomplished mortgage broker who can look out for you. At Zanda Wealth Mortgage Brokers, we have many years of experience helping clients reach their home ownership goals with successful financing.
Zanda Wealth Mortgage Brokers Can Guide You Through the Construction Loan Process
You don’t get gouged with high interest rates during construction
You don’t run out of money before completion of your construction project
Pair you up with low-deposit loans to facilitate the start of the project
Find the lowest borrowing rates for your construction loan
Hold your hand throughout the process with a seasoned and qualified broker helping you along the way
Understanding the Progress Payment Structure For Construction Loans
After the deposit, there are five points along the construction progress where draw-downs to you are made by the lender:
Point 1: Base (or Slab Down)
Point 2: Frame
Point 3: Lock-Up
Point 4: Fit-Out (Roof)
Point 5: Lock Up (Completion)
Navigating the Stages of the Construction Process
The construction process follows a series of stages that helps to organise and streamline the building of your property.
These stages include:
- Building Contact: Finalizing the agreement with your builder
- Building Plan: Designing and planning the construction
- Council Approval: Securing permission for the construction
- Quotation: Finalizing the estimated costs for the construction
Financing Your Construction:
Choose Your Preferred Option
Option 1: Land purchase and independent builder
Option 2: House & land package
Insights into Interest Rates for Construction Loans
How do interest rates on construction loans compare with traditional home loans?
While construction loan interest rates may initially seem higher than those of a traditional home loan, the structure of the loan can potentially lead to savings. Since you’re only charged interest on the amounts drawn down, you could pay less interest overall during the construction period. However, once the construction is complete and the loan converts to a traditional home loan, the rates would then align with those of regular home loans.
Factors affecting construction loan interest rates
Several factors influence the interest rates on your construction loan. These include the loan-to-value ratio (LVR), your credit score, the loan amount, and the construction period’s length. Other factors may include the prevailing market conditions, your employment status, and the overall risk profile of your project. Working with Zanda Wealth Mortgage Brokers, you can understand these factors better and secure a loan that meets your construction needs at competitive interest rates.
Advantages of Home Construction Loans
- Control Over Construction Stages: Construction loans offer you the unique advantage of managing payments as per construction progress, ensuring funds are used efficiently.
- Improved Cash Flow: By releasing funds in stages or ‘draw-downs,’ you only pay interest on the amount used, which can significantly improve cash flow during construction.
- Lower Interest Rates: During the construction period, you’re typically charged interest only on the funds drawn down, potentially leading to lower interest costs.
- Flexibility in Repayments: Construction loans often offer interest-only payments during the build, allowing flexibility in managing your finances.
- Potential Savings on Stamp Duty: If you’re building a new home, you might only need to pay stamp duty on the land value rather than the entire property value, leading to considerable savings.
- Protection Against Incomplete Work: Funds are only disbursed after each construction phase is satisfactorily completed, providing a safeguard against incomplete or substandard work.
Locations We Serve
Sydney
Brisbane
Gold Coast
Melbourne
Adelaide
Canberra
Darwin
Hobart
Launceston
Secure Your Construction Loan Today With the Help of Zanda Wealth Mortgage Brokers
Don’t let high-interest rates or funding shortfalls derail your construction project. At Zanda Wealth Mortgage Brokers, we secure low-deposit loans, negotiate the lowest borrowing rates, and ensure a smooth loan process. Let us guide you to a successful construction project.
construction Loans
