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- HOME
- BUYING YOUR
FIRST HOME? - UPSIZING OR DOWNSIZING
YOUR HOME? - INVESTING IN
PROPERTY? - BUILDING OR RENOVATING
YOUR HOME? - REFINANCING OR
CONSOLIDATING DEBT?
FAQ - Building and Renovating
- How do construction loans work?
- I want to purchase a land and build a house, how much can I borrow?
- What documentation is required for a construction loan?
- Can owner builders get a construction loan?
How do construction loans work?
Construction Loans are a progress payment facility. The loan proceeds will be not released to the borrower on settlement, rather it is held by the lender to make payments to builder to complete the building. Repayments are interest only during the period of building.
I want to purchase a land and build a house, how much can I borrow?
Loan to value ratios vary between lenders, with most currently having maximums around 90%. Valuations comprise of the land value and value of the house to be built, based on the building contract. The total loan will usually be split into two components, the land loan and the construction loan.
What documentation is required for a construction loan?
Besides the usual documents required for a home loan application, refer to Checklist for Your Home Loan Application (link), construction loans also require a fixed price building contract between the borrower and licensed builder, building plans, permits and specifications.
Can owner builders get a construction loan?
Owner builder construction loans have far more restrictive lending criteria; most lenders will require you to actually be a registered builder.
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