Everything you need to know about residential construction loans and home loan financing
Residential construction loans and home loan financing
It’s tough to decide between building and buying a new home, but perhaps even more daunting is to put together the finance you need to make it happen. Thankfully, if you arm yourself with all the necessary knowledge it becomes a much easier challenge. As a dynamic residential homebuilder with a passion for helping people across Perth find affordable living solutions, we take immense pride in being able to provide assistance. Drawing upon our many years’ experience we’ve detailed everything you need to know about residential construction loans and home loan financing.
What is a residential construction loan?
A residential construction loan is a short-term loan, typically with a maximum term of one year to account for the construction period. It features variable rates that will fluctuate with the prime rate. This loan provides an individual with the necessary finance to pay for the cost of building a house, with payments being allocated to various phases of the construction process.
What is home financing?
House financing refers to a loan provided by a financial institution for the purchase of a residential property.
What is the First Home Owner Grant (FHOG)?
This scheme was introduced in 2000 and is designed to assist the first home buyer by offering financial assistance in the form of a grant. If you’re unsure as to whether you qualify, contact the specialists for expert advice.
How do I get approval for a residential construction loan?
To secure approval, your financier will need to see a detailed construction timetable and the corresponding budget. Following approval, you will be required to make interest-only payments during the construction process.
What are the benefits you can look forward to?
- Access large amounts
Simply put, a construction loan helps you access the large amount of money required to build, allowing you to pay it off.
There’s nothing more frustrating than contractors failing to keep to schedule. However, to secure this finance, your contractors will have to confirm a timeline and detailed plan for your lender. This helps to ensure not only a quality finish but that the process is completed as per the agreed deadlines.
Traditionally it takes time to build equity, whereas if you build your own house, you are buying an asset which will appreciate over time. Furthermore, if in the future you need the money, you can refinance or sell your home at it increased value.
Quite simply there is no greater satisfaction than that experienced from building something of your own from the ground up.
Whether you’re buying or building, there are some important things to remember:
- The best type of loan to suit your needs
- How much should you invest without putting too much pressure on yourself and your lifestyle
- The size of the deposit you put down
- The value of the house you want to buy
If you still require more information or have a burning question, you can get in touch with us. We are always keen to assist and help you realise your ambition of living in your dream home.
At My Homes WA, we have a construction loan specialist, who will guide you through the finance maze and get you the best available deal; one which suits your circumstances and life choices.
Contact us now to get started.