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Personal Construction Loan

Discussion in 'Property Finance' started by TML, 3rd Aug, 2016.

  1. TML

    TML Well-Known Member

    Joined:
    4th Aug, 2015
    Posts:
    113
    Location:
    Sydney
    Iam currently drawing up the plans for my knock down rebuild for a two storey home and the next step is to obtain a construction loan.

    Could the mortgage experts here give me an idea of which lenders offer construction loan? and what sort of construction loan should i be looking for and what services and facilities available?
     
  2. MC1

    MC1 Active Member

    Joined:
    23rd Jun, 2015
    Posts:
    27
    Location:
    Melbourne
    All lenders do construction loans.
    If you're asking about owner builder that's a different story
     
  3. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    897
    Location:
    Melbourne
    Not all lenders do construction.

    Of the ones that do, most will want a fixed price contract with 5 stage payments. Many smaller boutique builders and architect designs will want payments monthly instead and the contract isn't fixed, it's prime cost or similar. These are more dificult to finance.

    Owner builder is harder again. Most lenders will only lend against the land value until you have the certificate of occupancy for the build.
     
    York likes this.
  4. TML

    TML Well-Known Member

    Joined:
    4th Aug, 2015
    Posts:
    113
    Location:
    Sydney
    Thanks guys.

    The contract is almost fixed with only one PA which is hydraulics.

    The builder wants staged payment.

    any recommendation to which lenders will be best to approach for a construction loan?
     
  5. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    897
    Location:
    Melbourne
    There's quite a few lenders to choose from, especially if you are borrowing less than 80% of the contract price. Some lenders have a premium to the interest rate during construction, and most charge around $250 for the extra valuation and progress payment processing. Some lenders can build while the loan is fixed, most need a variable rate loan.

    Investigate your other needs in a loan, fixed, variable, offset, branch access etc. the construction portion is usually only 3 to 6 months of a loan for up to 30 years.