CONSTRUCTION LOANS

Why Choose Us for Your Construction Loan?

• Expertise in Finding the Best Construction Loans: We have the experience to identify the most suitable construction loans tailored to your unique needs.
• Education and Confidence: We take the time to educate you about the loan options available, ensuring you have the knowledge and confidence to make informed decisions.
• Time Savings: We streamline the loan process, saving you valuable time that you can invest in planning and designing your new home.
• Ensuring Your Short-Term Building Goals Become Long-Term Lifestyle Dreams
• Purchasing land and constructing your own home is the epitome of the Australian Dream. It allows you to design a home that fits your family’s needs and choose the perfect location. However, the financial aspects of land acquisition, construction costs, and the time it takes to build make construction loans distinct from traditional home loans.

How Construction Loans Work

• As you embark on your building journey, you’ll have a construction loan during the property purchase and construction phases. This loan will transition into a standard mortgage once construction is complete.
• A construction loan typically features a short-term variable interest rate, with interest-only payments made on the outstanding balance during the construction period. As the builder progresses, they receive payments in six increments, leading to an increase in interest during this phase.
• When construction concludes and the loan shifts to a standard mortgage, there are no additional costs associated with the transition. Thus, securing a favourable rollover rate from the outset is crucial.

Step-by-Step Guide to Understanding Construction Loans

Step 1: Determine Your Borrowing Capacity

Consult with a mortgage broker to ascertain your borrowing capacity. It’s vital to ensure you can borrow enough for the land while still managing rent and bills until construction finishes.

Step 2: Find Your Ideal Land

Consider various factors such as the type and size of the house you wish to build, the suitability of the land, your financial capacity, potential costs for earthworks (if building on a slope), land grants, and land settlement.

Step 3: Research Building Ideas

Explore display homes and engage with builders to gain insight into your preferences and construction-related costs.

Step 4: Secure the Land

Make an offer and put the land under contract. Discuss the funds required for construction, items not included in the construction contract (e.g., driveways, curtains, landscaping), a cash buffer for potential budget overruns, pre-approval for the estimated construction loan, and property registration.

Step 5: Initiate Building Plans

Once you have a land contract, start organising the construction process. Finalise architectural plans and obtain quotes from builders in the form of a tender, which should encompass all specifications, inclusions, and allowances for the build.

Remember to consult with your construction loan broker if you’re applying for construction loans on existing homes, as the process may differ slightly.

Key Features of Construction Loans

Option 1: Buy the land and choose your own builder and house design.
Option 2: Opt for a House and Land package, acquiring both the land and house together.

Benefits of Construction Loans:

• Control: Draw down your loan in stages, releasing funds only after you’ve approved the quality of work.
• Improved Cash Flow: Interest-only payments are available during construction, aligning with your project’s financial needs.
• Reduced Interest: Pay interest only on the funds drawn down, leading to lower initial repayments.
• Convenience: You can make additional payments on your construction loan at any time, reducing your loan balance and minimising interest costs.
• Opportunities to Save: Construction loans typically have lower stamp duty, as it’s often based solely on the land’s value. Additionally, many state governments offer concessions and grants for new builds.
• Protection from Financial Loss: Construction loans provide safeguards against subpar construction or incomplete work by disbursing funds to the builder incrementally upon each build stage’s completion.

Get Pre-Approved for Your Loan

Building a new home entails comprehensive planning, from the number of bedrooms to intricate details like double-glazed windows. By obtaining a loan pre-approval, you gain clarity on your budget, enabling informed decision-making in your house and land search.

Start Your Homebuilding Journey Right

While constructing your new home may take 6 to 12 months, your mortgage will be a long-term commitment lasting 20 to 30 years. This makes securing the right loan a top priority. With the many options and considerations involved, it’s wise to consult with experienced professionals with access to tailored loan packages. Speak to the experts who care about turning your dream home into a reality.

At AAA Mortgage Solutions, a strong partnership between you and our team is the key to your financial success. We’re not just mortgage brokers but your trusted advisors on the path to realising your home-ownership dreams and building a brighter financial future.

Contact us today to discover how we can assist you in securing the perfect Construction Loan and taking that important step towards achieving more in life.