First-Time Home Buyers: On Construction Home Loans

Loans for newly constructed homes can be obtained by either the prospective owner or homebuilder. As the name suggests, this type of loan is only applicable if you are having your home built from the ground up. Typically short term, construction home loans are mainly designed to fund the five stages of the home construction process, namely purchase of the land, flooring, roof, lock up, and finalisation. You can decide to break up the loan’s drawdown into five progressive draws that correspond to each specific construction process.

The moment one part of the construction is finished, you may then draw down the next portion of the loan. After each completed portion, a valuer will generally inspect the work to ensure it fulfils every criterion listed in that particular portion of the construction home loan.

When you apply for a construction home loan, your lenders will generally ask you for two things before approval is granted: council-approved plans and a fixed-price building contract. If you need to borrow more money to fund improvements such as decking or landscaping, you may get your property revalued by your lender once construction of the initially approved structure is complete.

You may consult a reliable home builder in your area to apply for a construction home loan or to learn more about it.

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