Construction Loans

If you’ve chosen to build your dream home rather than buy an existing one, it may surprise you to learn that you won’t be getting a traditional mortgage. Instead, you’ll likely be looking to secure a construction loan.

For someone who is building their dream home, there are plenty of benefits to a construction loan.

For your benefit, we’ve sharing the ins-and-outs of a construction loan, the pros and the cons and everything you need to know about applying for a construction loan.

What is a construction loan?

Construction loans can be used to build your first home, fund major renovations, build an investment property or develop a commercial space. Unlike traditional home loans, which are based on the market value of the home and determined by the real-estate market, construction loans are based on what the project value of the home will be once the build is complete.

There are three different types of construction loans that you can choose from:

Construction to completion: These types of loans are good if you have construction plans and timelines in place. In this case, the lender pays the builder as the work is being complete – usually in 5 stages starting with Slab, Framework, Lockup, Fit out or Fixing, and Completion. Once construction is complete the cost is converted to a mortgage at closing.

Construction-only loans: Construction-only loans are a little different to construction to completion. Construction-only loans must be paid off in full once the building is complete. These types of loans are a good choice if you have a large amount of cash to work with or are confident in the sale of your property.

Renovation loan options: If you’re buying a fixer-upper and looking to renovate, there are other lending options such as extending your current mortgage, securing a line of credit loan releasing home equity or even personal loans.

At Ugo Finances, our dynamic team of mortgage brokers take the time to understand your finance requirements and guide you through the entire loan process.

Having strong relationships with over 45 lenders, including major banks and non-bank lenders, our team to find the right loan solution for you.

Contact Us

If you’re ready to take the next step towards building your dream home, contact our team on 02 8026 0775 to talk about your loan options.