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Construction Loan
Are you looking to build or renovate your home or investment property? A construction loan (also known as a building loan) enables you to borrow money from a lender to help fund the construction.
The costs of building and renovating a property are extensive and can add up over time. In many cases, the property owner won’t have the cash available to pay for all the construction outright, which is why securing finance is crucial to bringing the build or renovation to life.
How does a construction loan work?
A construction loan uses the property being built or renovated as security. The property will be valued according to either the combined cost of the land and construction, or the estimated final value of the property once construction is complete.
The funds from a construction loan are released directly to the builder periodically rather than upfront, in line with the staged progress of the construction project. That ensures you pay the builder only when construction milestones are met. This is known as progressive drawdowns or progress payments. These partial payments are drawn down from a total loan amount that is approved upfront.
Typically a construction loan will commence with an interest-only period which lowers the repayments you pay and improves your cash flow. Once this period ends, the loan will typically convert to a principal and interest loan.
What should you consider when taking out a construction loan?
The application process for a construction loan is extensive and will likely involve providing a detailed building contract or tender, an approved Development Application (DA), and quotes for any additional work by other vendors.
Your lender is likely to require that you work with a registered builder. The builder will need to provide specific documents like insurance details and milestone invoices aligned with the agreed payment schedule before receiving funds from the lender.
Why work with FABE Financial to secure your construction loan?
Building or renovating a home or investment property is stressful enough without having to worry about how to fund it. FABE Financial takes the stress out of the construction loan process, guiding you every step of the way to help your construction project get off the ground. Its extremely important to understand your borrowing options in advance, before signing off on any build contracts.
Get your construction project started and completed sooner, by securing your construction loan swiftly with FABE Financial.
Construction Loan
Are you looking to build or renovate your home or investment property? A construction loan (also known as a building loan) enables you to borrow money from a lender to help fund the construction.
The costs of building and renovating a property are extensive and can add up over time. In many cases, the property owner won’t have the cash available to pay for all the construction outright, which is why securing finance is crucial to bringing the build or renovation to life.
How does a construction loan work?
A construction loan uses the property being built or renovated as security. The property will be valued according to either the combined cost of the land and construction, or the estimated final value of the property once construction is complete.
The funds from a construction loan are released directly to the builder periodically rather than upfront, in line with the staged progress of the construction project. That ensures you pay the builder only when construction milestones are met. This is known as progressive drawdowns or progress payments. These partial payments are drawn down from a total loan amount that is approved upfront.
Typically a construction loan will commence with an interest-only period which lowers the repayments you pay and improves your cash flow. Once this period ends, the loan will typically convert to a principal and interest loan.
What should you consider when taking out a construction loan?
The application process for a construction loan is extensive and will likely involve providing a detailed building contract or tender, an approved Development Application (DA), and quotes for any additional work by other vendors.
Your lender is likely to require that you work with a registered builder. The builder will need to provide specific documents like insurance details and milestone invoices aligned with the agreed payment schedule before receiving funds from the lender.
Why work with FABE Financial to secure your construction loan?
Building or renovating a home or investment property is stressful enough without having to worry about how to fund it. FABE Financial takes the stress out of the construction loan process, guiding you every step of the way to help your construction project get off the ground. Its extremely important to understand your borrowing options in advance, before signing off on any build contracts.
Get your construction project started and completed sooner, by securing your construction loan swiftly with FABE Financial.