Construction Loans
A residential Construction Loan is necessary if you are borrowing to build or renovate your property.
Generally there are five to six stages of construction including, preparation, laying slab base, framework, lock-up, fixing and completion. The loan is progressively drawn down over each construction period with interest only repayments.
At completion of each stage, the builder will present you with an invoice which is authorised and presented to the lender for payment.
Before paying the builder, the lender may require a site inspection and valuation of work completed to date. Some lenders may charge an inspection fee for each visit. It is important that the construction stages must be completed as scheduled.
Generally lenders require a fixed priced building contract and council approved plans to support an application.
The builder will be advised of the mandatory insurance requirements in order to proceed including Builder’s Insurance of works, Home Warranty Insurance, Workers’ compensation and public liability insurance.
The building should be completed within 12 months.
