Construction loans explained

Embarking on the journey of building your dream home is an exciting milestone. However, navigating the financial aspects of construction can be overwhelming. That's where construction home loans come into play. Let's delve into what construction loans entail and how they can benefit you.

What is a construction loan?

A construction loan is a type of financing specifically designed to fund the construction of a new home. Unlike traditional mortgages, where you receive the full loan amount upfront, construction loans provide funds to the builder in stages as the construction progresses. Therefore your loan and repayments gradually increase as your home is being built.

When do repayments start?

Repayments start at settlement, that’s when the bank transfers the funds for your land, and you officially become the owner.

During the construction phase, you'll typically only pay interest on the amount drawn down, rather than the full loan amount.

Once construction is complete, your loan will convert to a standard mortgage with regular payments based on the total loan amount, interest rate, and loan term.

We can help.

Your repayments during construction can vary based on a number of factors such as the interest rate, build time-frame, loan amount etc. As the buyer, it's important to factor repayment amounts into your budget. We can provide you with the projected repayment amounts that you can expect you pay.