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Are you considering renovating or building a new house?
As property prices increase, many people find that renovating or rebuilding is a cheaper option than buying a new home. This is where a construction loan comes into play. With a construction loan, funds are released periodically from the lender as construction progresses and this allows you to pay the builder as required. Unlike a home loan, where you would usually be paid in a lump sum, you only pay the interest on the portion you draw upon and once building is finished, the loan reverts to normal monthly repayments.
Is a construction loan right for me?
This very much depends on your individual requirements and we highly encourage sitting down with a mortgage broker to discuss your goals and objectives. In general terms, a construction loan is available to:
First home buyers to build a new home
Current homeowners who wish to extend, renovate or build a new home
Investors who want to build a new property
There are a number of advantages of construction loans, including lower repayments and less interest during the construction period. However, you may require a larger deposit and the overall interest rate may be higher. There is also more paperwork required by the lender before loan approval can be given. A mortgage broker can help you understand the process and walk you through step by step so you can make sure that a construction loan is the right option for you.
