Construction Loans & Finance
Looking for a Construction Loan?
Construction Loans, unlike a standard mortgage, which is for people who want to buy an established property that doesn't require any work or renovations,
the construction home loan was created for individuals that are building new homes or doing structural improvements separate from buying real estate.
Construction Loans, offer flexibility, convenience and allow you to build in stages.
Generally interest-only payments are made during the construction period, so your repayments are lower at this time. Your construction loans build is funded through a series of Progress Payments and paid to your builder after each stage of construction is completed.
Progress Payments & Drawdowns
Loans for construction projects are usually made up of progressive drawdown payments.
That means you'll receive installments of the loan amount at various stages depending on your Fixed Price Building contract, rather than receiving it in one payment at first like residential loans do sometimes require (though not always).
You generally only pay interest on what is drawn down while still avoiding any principal repayments.
How Do Progress payments Work on a Construction Loan?
Once a construction loan has been approved and the property is being built, lenders will generally make progress payments throughout the various stages of construction.
Progress payments will typically be paid directly to the builder at the completion of each stage.
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(1) Slab down or base: This is the payment to help you lay the foundations for your property. It may include the ground levelling works along with waterproofing of your foundation and initial plumbing & electrical works.
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(2) Frame stage: This is a sum that will assist you in constructing the framework of your home. It can cover partial brickwork, roofing, trusses, and windows, among other things.
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(3) Lockup Stage: This may include the external walls, and put in windows and doors (hence the term ‘lockup’, to make sure your house is lockable).
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(4) Fitout & fixtures: During the fitout stage the internal fittings and fixtures of your property are installed. It can cover plasterboards, kitchens and benches, plumbing, electricity and gutters.
(5) Completion: This is an amount for the conclusion of contracted items (such as final payments for builders and equipment), and can include fencing, as any finishing touches such as final painting and the site clean up.
How Can Bullet Finance Help
The Bullet Finance team are experts in construction loans across the Sutherland Shire and greater Sydney.
Our Goal is to
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Understand your construction loan requirements.
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Assist with your project feasibility analysis.
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Prepare a credit paper and submission outlining the transaction details, risks and mitigants.
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Maximise your lending ratios to allow a higher percentage of total project costs.
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Offer diverse funding sources for your construction loan
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Negotiating the lowest interest margin and fees for you.
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Negotiate other terms and conditions with existing and / or new lender(s).
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Assist with the implementation of post construction funding.
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Be with you all the way helping you to navigate the changing market conditions.
Construction Loans for Investment Properties
When it comes to investment properties, construction loans can be a great way to finance the purchase and construction of a new property.
Investment construction loans are typically short-term loans that come with higher interest rates than traditional mortgages. However, they can be a good option for investors who are looking to quickly finance the purchase and construction of a new property.
Construction loans can also be used to finance the renovation of an existing property.
If you're thinking about taking out a construction loan for an investment property, it's important to talk to us to ensure we find the best construction loans for your needs, and make sure that you have a clear plan for how you're going to use the loan and that you understand the risks involved.
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At the end of the construction period you typically switch to a suitable fixed or variable loan which we can help you with.
