Building your dream
Construction loans make it possible to build a home when you might otherwise be unable to do so. Building a home can be a great experience if you want to design something unique or specific to your needs and the needs of your family, or for investment purposes. However, there is also significantly greater risk when procuring construction loans than just purchasing an existing home. Your Madd Loans mortgage broker will source the most suitable loan for your situation and guide you through each step of the way.
So how does it work?
With a construction loan, you can break up the draw down of the loan amount into five progressive draws, which parallel the construction phases. As one phase of the construction is complete, you are able to draw down the next portion of the loan. This means that interest is only being calculated on that amount which has been physically drawn down, and you are only making repayments on the portion you have used. When construction is complete, you can nominate which product or loan type your loan reverts to. These stages normally consist of:
- Base Stage
- Frame Stage
- Enclosed Stage
- Fixing Stage (roof)
- Practical Completion (lock up)
Some things you need to get before applying
- Plans & specifications
- A fixed price contract from a registered builder
- Council approval
Some of the potential risks include
1.The home will not be completed on schedule or on budget
2.When completed, the home will not be worth as much as it cost to build
If you are willing to take on the risks of a construction loan, and you have the financial cushion available to help you through the bumps in the road, a construction loan may be the right choice so you can build your dream home and Madd Loans is here to help.