Most people know that a mortgage is a form of home loan that is spread over 25-30 years, which enables a person to own their own home. Of course, there are many different mortgage products on offer from major lenders, yet there are alternative ways to fund a self-build and one is a construction loan.
What is a construction loan?
If you approach a leading Australian construction loan broker, you can find out more about the product. Rather than a loan to buy a house, a construction loan is solely for the purpose on building a home; the client might already have the plot of land and they wish to secure funding to build their dream home. Using an established broker means you have more options, as the broker has working relationships with many lenders, they can probably find a loan package that meets with your requirements.
Simple step-by-step process
The first step is to make an appointment with the broker; this can be via a Zoom call, when you can discuss the various loan packages the broker can facilitate. The broker has a useful calculator that enables you to work out monthly repayments and discuss loan duration. This would be free and without obligation and it gives you a chance to compare with other alternatives.
Choose your loan package
With the help of the broker, you can select the loan package that best meets your needs and if your application is approved, you can move to the next stage, which is the loan final approval and that doesn’t take long to complete. Click here for information about renting a property in Sydney.
Construction
The builder gives you invoices at specific stages of the build and after inspection, you sign off on the work. The broker facilitates the payment from the lender to the builder and this continues until the final inspection and payment. Once the project is complete and the final payment is made, you are ready to move into your dream home. The choice of builder is entirely yours, as long as they can provide the necessary paperwork to the lender. Of course, we recommend that you do your homework regarding the builder; ask to view at least one of their projects so you can see the standard of workmanship.
Once the build is complete, you make your payments as agreed to the lender and the main difference to a traditional mortgage is the payments are staged to the builder, rather than making a single lump sum payment.
If you would like to learn more about construction loans, start with an online search to find a leading Australian broker and see what they have to offer. A traditional mortgage is not for everyone, which is why you should consult with a finance broker and see how a construction loan differs from regular home loans.
