It is important to understand the difference between the construction loan and standard home loan. The Construction Loan is being drawn down in different stages as work in progress. The monthly mortgage repayments slowly increase as the construction work progress towards completion. The loan repayment amount reaches in full amount when the whole construction is complete. Many Lenders also offer interest only repayments during the construction process which revert to principle and interest repayments once the construction is completed.
To qualify for a Construction Loan, you will need to have council approved plans and a fixed price tender from a registered builder. You should also note that you will need to use your savings or equity before drawing down on your Construction Loan.
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