In particular we focus on getting the loan structure right the first time, choosing which lenders to use in the right order (yes this is important) and finally getting our clients the best deal possible.
Construction Loan
A construction loan is loan specifically used for building a new property or doing renovations to an existing property. Loan funds are released in stages to the builder as the build progresses. A construction loan is a type of loan for those who plan to build their own home, rather than purchase an established property.
Construction loans let you draw down your loan in chunks or instalments. Most banks offer this facility and may refer to these instalments as ‘progressive drawdowns’ or ‘progress payments’. We use both, but they mean the same thing – individual payments, drawn at various stages of the project, from a pre-agreed loan amount. Before you start, the bank will need an ‘as if complete’ valuation – an estimate of the market value of the land and proposed building/renovation. This ensures the amount of the loan is realistic – and that you have enough to get the job done. This protects you and and the bank.
They are higher due to the lender finding it difficult to value the property due to future changes that may occur to the neighbourhood or the builder does not execute the building correctly.
Learn MoreTo calculate construction loan repayments you must multiply the loan balance by the interest rate (as a %), divide this figure by 365 (amount of days in the year), multiply the daily figure by the number of days that the account stayed on that balance.
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