Construction Home Loans for Building
Building a new home can be a fun, exciting time. You get to choose all the great features you always wanted and you get to create a home that is uniquely yours.
Unfortunately, finding the right construction loan to suit your needs is not always so much fun.
How Do Construction Home Loans Work?
Banks have a slightly different mortgage quote process for setting up construction loans as compared to a regular home loan for an established house.
When you buy an established house, the bank extends the amount of money you borrowed in order to complete the purchase and you simply move into your new home.
With construction loans, your bank will generate a set of progressively drawn payments that add up to the total amount you borrowed. As your builder builds your home, your bank is sent an invoice for each stage of construction as it’s completed. Your loan is drawn several times until the builder has been paid, your house is complete and then you get to move in once all these stages are finalised.
It sounds complicated, but you don’t have to work through it alone. You have the option of working with a qualified, professional Origin Finance Home Loans consultant who will be happy to walk you through the process so there’s no confusion.
Do I Need To Buy a House & Land Package To Get a Construction Loan?
It’s not always necessary to purchase a house and land package from one location – although arranging a loan for a package does make your home loan options a little easier for you.
After all, you might find land you like much better somewhere else, or you might prefer a different builder to the one making you the offer. The choice is completely yours.
You do have the option of purchasing your vacant block of land first and then going out to source your builder once your land has settled. This could mean arranging two separate loans: one for your land purchase and another to pay for your construction.
Do I Have To Use A Licensed Builder To Construct My Home?
Some banks do have an option that may allow you to build your own home your way in your own time, but this option is definitely not suitable for the faint-hearted!
Generally, most banks want to see that the home you build is going to be a good security property for a long time to come. This is one reason why they prefer that you choose a licensed builder to construct your dream home.
If you’d like to discuss more options for building your new home and finding construction loans that suit your plans, contact a professional mortgage lender today.