Building your Home or Investment Property
Building your own home can be an exciting time for you, but to the inexperienced it can seem somewhat daunting, 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 special 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, valuer, builders, council officers etc. plus an enormous amount of paperwork.
What documentation will be required?
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:
Before the first payment is made to the Builder, you will need to provide the following:
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, Australian First Finance will ensured that your loan type will convert to a loan that is most suitable to your needs and personal situation.
First Home Owners Grant The First Home Owners Grant (FHOG) is paid to the lender by the government when the first draw down 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. We have access to a number of 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.
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.
Building your own home can be an exciting time for you, but to the inexperienced it can seem somewhat daunting, 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 special 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, valuer, builders, council officers etc. plus an enormous amount of paperwork.
What documentation will be required?
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 “Draw down Request” This process is repeated for all stages of the construction
- Occupancy Permit – provided by the builder
- Building Insurance over the property in your name
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, Australian First Finance will ensured that your loan type will convert to a loan that is most suitable to your needs and personal situation.
First Home Owners Grant The First Home Owners Grant (FHOG) is paid to the lender by the government when the first draw down 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. We have access to a number of 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.
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.
