Building your own home can be an exciting time for you, but to the inexperienced it can seem somewhat daunting, Ocean Home Loans mortgage brokers are experts in construction home loans and will be able to provide you with invaluable support not only during the loan application process, but also ensuring that your fixed price building contract meets the requirements of all our panel lenders.
What to expect with Construction Home Loans
Every lender processes a construction home loan in their own unique way, with a normal loan, submitting the loan application and having it approved in a timely manner is much simpler.
Construction Home Loans are far more time-consuming to assess and get approved, simply by the fact there are more parties involved, such as solicitors, conveyancer’s, valuers, builders, council officers etc. plus an enormous amount of paperwork.
Ocean Home Loans mortgage brokers are experts in construction home loans and it is our job as your mortgage broker to liaise with all the different parties involved, to not only get your loan approved, but to ensure that if there are any issues, they are corrected as they arise, and where possible, prevent them from occurring in the first place.
What documentation will I require?
In addition to the standard items required for a loan application, to obtain approval for a construction home loan you will also need to provide the following:
- Copy of Fixed Price Building Contract
- Copy of Council Approved Plans & Builders Specifications
Before the first payment is made to the Builder, you will need to provide the following:
- Copy of Builders All Risk Insurance
- Copy of Owners Warranty Certificate
- Authority signed by you authorising payment to be made to the builder, commonly referred to as a “Drawdown Request” This process is repeated for all stages of the construction
When requesting the final payment once construction has been completed, you will need to provide the following:-
- Occupancy Permit – provided by the builder
- Building Insurance over the property in your name
Ocean Home Loans mortgage brokers have software that can quickly compare construction home loans from over 30 lenders to find you the most appropriate Construction Home Loan & the best deal, so please contact us on 07 5593 1420 to talk with an Ocean Home Loans mortgage broker or enquire online and we will contact you as soon as possible to discuss your options.
How is interest calculated during the construction phase?
Until the first progress payment is made, there is no interest charged on your loan. Charges commence from the first progress payment that is made to your builder. Payments are usually calculated on a variable, interest-only basis on the amount drawn down.
On completion of the project, Ocean Home Loans mortgage brokers will have ensured that your loan type will convert to a loan that is most suitable to your needs and personal situation.
Home builders can choose from a wide selection of home loan types after completion, such as:
Basic Home Loans
Professional Package Home Loans
Fixed Rate Home Loans
Family Pledge Guarantor Support Home Loans
Self Employed Home Loans
Low Doc Home Loans
Combination or Split Rate Home Loans
100% Offset Account Home Loans
First Home Owners Grant
The First Home Owners Grant (FHOG) is paid to the lender by the government when the first drawdown is made to the builder. This means that many people who are borrowing a high percentage of the property value, may have enough funds to complete the project, but may not have enough funds to settle on the purchase of the land. Ocean Home Loans mortgage brokers have access to several lenders who will advance the building grant early to allow for the construction to proceed.
Each state & territory has their own incentives for both first home buyers and those building homes. We recommend that you contact your state government to confirm the incentives that you may be eligible for.
Please contact us on 07 5593 1420 to talk with an Ocean Home Loans mortgage broker who can give you expert advice on first home buyer Construction Home Loans, or enquire online and we will contact you as soon as possible to discuss your options.
Buying the land first?
If you are buying the land, you may want to consider splitting the loan into a land loan and construction home loan, which means that they will be advanced at different times. If this is not done, you will need to put all of your required funds in at the time the land settles.
It is also quite common to have your land loan approved and a conditional approval provided for your construction home loan, subject to the provision of a fixed price building contract. This allows you to settle the land and then look for a builder that suits your requirements. It also provides you with a pre-approved final build price based on your deposit, land price and the borrowing capacity assessment done by the lender.
Ocean Home Loans mortgage brokers are experts in construction home loans, so please contact us on 07 5593 1420 to talk with an Ocean Home Loans mortgage broker or enquire online and we will contact you as soon as possible to discuss your options.
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