The loan structure is designed for borrowers building a new home or planning major renovations to their existing residence.
Typically when building from scratch, you are permitted to borrow up to 90% of the value of the property for owner-occupation, based on the value of land and the estimated value of the house once constructed. Variable interest will apply –discounted during the construction period, and reverting to a standard rate for the life of the loan after project completion.
Unlike standard home loans the funds will be drawn down in stages rather than lump sum payment. If your residence also includes a place of business, you may require a commercial loan.
Positives of the Construction Loan:
- Suitable for those whom wish to undertake capital works on their property;
- When building a house you can obtain required funds in small amounts, at regular intervals;
- Rather than be advanced the entire loan at once, you'll be able to draw down funds to purchase the land, then purchase building materials as and when required;
- Once construction is complete, you'll have the equivalent of a standard home loan with features such as additional repayment facilities.
