Typically, construction loans are temporary with a maximum of one year, and have unpredictable rates that move up and down with the main rate. The rates on this kind of loan are higher than rates on stable financial loans. To get sanction, the lender will require observing a construction schedule, comprehensive plans and a sensible budget, sometimes described as the "story" following the loan.
Once permitted, the borrower will be set on a bank-draft, or draw, plan that follows the project's construction phases and will naturally be probable to make only interest payments in the duration of construction. As funds are requested, the lender will frequently send somebody to keep an eye on the job's progress.
Building a new home? Or planning a major renovation in your existing home? If yes, then a construction loan could be your most advisable option. Select My Loan can help you source the most appropriate loan solution for you.
It is important to understand how a Construction Loan is different to a normal Home Loan. The difference between a construction loan and a standard home loan is that instead of a lump sum payment at the time of settlement, the loan is usually drawn down in stages. Payments (or draw downs) coincide with the initial purchase of the land followed by a number of key construction stages. This results in your monthly repayments gradually increasing as construction progresses until the building is finished.