Mortgage Australia - Demystifying Building and Construction Loans

What is a Building Loan or Construction Loan?

Building Loans, otherwise known as construction loans, are designed specifically for people building a new home. They can be granted to those wishing to design and build their own home, those that want to buy land for construction purposes and in some cases lenders can approve construction loans for those wishing to undertake renovations.

When building loans are implemented loan funds are drawn in stages as the builder reaches agreed construction milestones.

Why choose construction and building loans over other home loans?

-    You lender only makes progress payments when the builder has reached certain objectives and met satisfactory building standards, ensuring quality workmanship.
-    Most lenders only require interest payments on the building loan during the construction phase minimising your mortgage repayments until your new home is completed
-    After completion the loan becomes a standard variable or fixed interest loan with associated benefits.