Australians love to build things and while it can be fun, it can be hard work too and things don’t always go smoothly. A construction home loan is a type of home loan designed for people who are building a home as opposed to buying an established property.

 

​It's for you if:

• you’re building a new home

• looking at renovating your existing home 

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During the project, you only pay interest on the money already paid out. This helps keep payments low while you’re paying other costs such as rent.

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A construction loan is usually on a floating interest rate.

 

A construction loan will usually be interest only over the first 12 months and then revert to a standard Home Loan with principal and interest repayments.

 

In other words under a construction loan, you borrow money to pay for the cost of building your home and then once the house is complete and you move in, the loan is converted to a permanent mortgage.

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During construction, you only make interest payments on the amounts drawn down from the construction loan limit.

 

Repayment of the original loan balance only begins once the home is completed. These loan payments are treated just like the payments for a standard mortgage plan, with monthly payments based on an amortization schedule.

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So whether you’re ready to start building or still planning your new home, there’s never been a better time to get in touch.

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