While building your own home that is customised to the needs of you or your family can be a great experience, unfortunately this can often come with additional complications and ultimately stress when compared to purchasing an existing one.
Loans issued for construction purposes typically have a different structure than a standardised home loan. These are designed specifically for people looking to build their own home from scratch, or those undertaking significant renovations.
With a construction loan, you generally receive installments of the loan at various stages of the build or construction, as opposed to receiving it all at the start in one lump sum. Normally you only pay interest on the amount that is drawn down as opposed to the total loan amount, and this concept is designed to cover you when working with a builder.
Once you have received a preapproval for a construction loan – and it’s important that you do so – the progress payments will be issued throughout the various stages of your home’s construction. Whether these are paid directly to the builder, mortgage broker or to yourself will vary depending on your lender.
In order to minimise risk to both the builder and the homeowner, the five stages of construction that the progress payments will be issued are:
1. Base Stage (foundation of the property, slab or base, and can cover ground levelling or plumbing)
2. Home Frame (can cover partial brickwork, roofing, trusses or windows)
3. Lock Up (building enclosure, external walls, windows and doors)
4. Interior Fit Out (internal fittings and fixtures, plasterboards, partial installation of cupboards and benches, plumbing, electrical or gutters)
5. Completion (finishing touches such as plumbing, electrical and overall cleaning)
Needless to say that navigating construction loans is slightly more complex when compared to more traditional mortgage options. It’s for that very reason that it’s important to select the right loan product that ultimately lines up with your vision, and working with a reputable broker like those found at Madd Loans can be just the ticket – so what are the perks?
It’s Our Speciality – While banks offer many products and services, home loans are the speciality of mortgage brokers. In turn, this also means construction loans too, and our ability to turn the complexities of a lender’s policies into black and white information can be invaluable.
We Play Matchmaker – With hundreds of loans available to Australian consumers, how do you know which option is right for you? A mortgage broker is able to “sift” through all of the choices for construction loans, and present the one that best suits your circumstances.
We Do The Leg Work – Did you know that Australia has over forty different lending providers? A broker like us sure does, along with the ins and outs of almost every one. Madd Loans provides you with one point of contact, while taking care of the paperwork so you don’t have to.
Our Service Is Free – Most forms of finance brokers do not charge to help you find the loan with the most competitive rates and repayments. Instead, the broker is paid directly by the lender you choose, meaning the benefits of using a broker don’t come as an extra charge.
We Can Save You Thousands – The key benefit of using a broker is usually sourcing the best possible interest rate and loan package that best fits your circumstances. Even a savings of 2-3% of a construction loan over a five year loan period can reduce your payments significantly.
Our Allegiance Is To You – Is a bank going to give you the heads up when interest rates drop, check in with you every few months, and swap your loan conditions to more favourable options if necessary? Probably not, but mortgage brokers do – we work for you, not the banks.
Bank On Our Reputation – While it’s only natural to feel wary when opting to use a finance broker, as a multi award winning service, our clients can trust in our experience to deliver them the very best loan packages from a wide variety of lending providers nationwide.
Since their inception in 2012, the team at Madd have worked tirelessly in providing over 2,000 Australians with finance options to help turn their dreams into reality. With the entire brand being built on referrals, Madd Loans owner George Samios takes great pride in making the loan process both fun, educational and stress free.
An independent operator can be your greatest asset when it comes to navigating loan options, as brokers are there to make you happy – not the banks. To speak to a Brisbane based professional about your options regarding construction loans, please get in touch with the team at Madd Loans today to help turn your property dreams into your reality.