When planning all the details of your new place, you want everything to run smoothly - especially your finances.
Most Australians would automatically think to apply for a home loan while arranging construction of their new property. After all, it is a home, right? And this means that the full amount of the loan is made available to you immediately so you can start drawing on it straight away - but, you'll also start paying interest on it straight away.
Construction home loans are vastly different - here's why
A construction home loan can help finance building your new home just as easily as a traditional home loan, and can help reduce risk, and lower interest payments.
The full loan amount is divided into several payments, with each payment being made available only after a certain stage in construction has been reached.
There are approximately five key stages of construction. As each stage is completed, your lender will send around a valuer to inspect the property, and make the required checks in order to validate the next payment release.
Giving you maximum flexibility, with less liability
With a construction home loan, your builder will only receive payments for work that is completed to a set standard, meaning you won't be left holding the short end of the paint brush if something goes wrong.
The bottom line? If your building isn't ready, your builder won't get paid until it is.
In addition, as the payments are released slowly, you won't be paying interest on the full amount of the loan - only on the amount that you've used.
Continue to selecting a great block of land.