Let Zanda Wealth help build or renovate your dream home.
We’ll set you up with financial protection and reduced interest for your home construction project.
How Do Construction Loans 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.
“We really needed to renovate our home and didn’t have enough free cash to make it work. Got onto Zanda Wealth from a recommendation and with a no mess, no fuss process, we were able to get a building loan and start the work. Cant thank them enough!”
David & Angela
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 *Brand Name*, we have many years of experience helping clients reach their home ownership goals with successful financing.
- You don’t get gouged with high interest rates during construction
- You don’t run out of money before completion of your construction project
- You don’t go through the long and tedious process of getting the loan
- 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
The Process of Building Loans
Progress payments (or draw-downs) are given to the borrower as the construction progresses along. This is vastly different from the usual home loan process of “borrower seeks a loan, borrower receives the entire amount upon approval”. A deposit (or down payment) must be made to pay for the initial material costs of starting the construction project.
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)
Then there are four stages to the build process:
Stage 1: Building Contact
Stage 2: Building Plan
Stage 3: Council Approval
Stage 4: Quotation
How To Apply For a Construction Loan?
You will need the usual documents that are required for a regular home loan such as your credit report and bank statements and other documents aligned with this.
You will also need land documents such as building permits, building contract, insurance documents, and council plans.
Contact us today for an assessment of your construction project and everything required to get set up and building.
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