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Construction Loans In Melbourne

Break Free Home Loans are a leading Melbourne mortgage broker, with over 20 years of industry experience. We provide lending solutions and advice tailored to your needs. We work closely with clients as trusted advisors and are accessible to clients when needed.

Our brokers work hard at understanding our client’s unique circumstances and helping them overcome common home loan challenges. Whether you’re a first home buyer or an experienced investor, we’ll help you find the best home loan for your situation. Whether you’re self-employed and have trouble proving your income or you’re a contractor or casual worker, we offer solutions for all types of clients’ income sources.

What Are Construction Loans?

Are you a home builder looking for financing to turn your idea for a dream home into a reality? Need assistance financing the construction process of your planned property? Break Free Home Loans provides highly specialized, professional construction loans to assist home builders throughout this process. Here’s how our construction loans service helps Melbourne home builders.

A construction loan is provided to individuals constructing or renovating a home rather than buying a new one. A construction loan is a specialized type of loan. It is provided to people looking to build a home or investment property. Because you are borrowing against a property that doesn’t currently exist, the lender is exposed to additional risk. This means that home builders are often required to provide a higher deposit than with other types of loans.

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Break Free Home Loans has a team of leading experts who specialize in construction loans for home builders. Our specialists will walk you through the eligibility criteria and help you throughout the whole process. Construction loans can be tailored to help you achieve your home-building goals. Contact us today on 1800 300 777 to find out more.

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How Does It Work

A construction loan works at first like a regular home loan. You will have to make repayments on the interest-only amount of the loan until construction is completed. Things change once your property has been built. Then you can either refinance to a standard variable rate or Principal and Interest loan or sell the property.

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Stages Of Construction

Construction home loans are paid out in a unique way compared to other home loans. Rather than receiving one lump sum, lenders receive the construction loan at regular intervals. These will align with the stages of construction, such as laying down the base, erecting the frame, and so on.

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Process And Costs

In general, lenders will need access to at least 10% of the cost of their planned property. This is to be put down as a down payment. You will also need to factor in the costs of land, stamp duty, and other associated fees. Construction loans in Melbourne can be taken out for both new builds and renovations.

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Pros And Cons

A construction loan could be perfect to help you achieve your home-building goals. It depends on factors such as your financial stability, goals, and the stage of your project. Construction loans offer a number of advantages:

  • You only pay interest on the amount borrowed, rather than the full value of the property;
  • Construction loans can be tailored to your needs;
  • The loan is flexible and can be drawn down as needed.

However, there are also some potential drawbacks to taking out a construction loan, including:

  • Rates for construction loans can often be high-interest rates;
  • The loan is often for a short term;
  • You may need to provide substantial security for the loan;

If you’re thinking of taking out a construction loan, it’s important to speak to one of our experienced lending specialists. They can assess your individual circumstances to help you decide if it is the best solution for your needs.

How To Get Construction Loans In Melbourne

Break Free Home Loans make the process of getting Melbourne loans for construction easy. Our specialists will guide you through every step of the process, from eligibility criteria to finding the loans for construction. We understand that each home builder’s circumstances are unique. This is why we tailor our services to suit your individual needs.
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Building Home Loan Requirements

To successfully apply for long or short-term construction loans you’ll need to meet several requirements. This includes appropriate permits, a deposit, insurance provisions, a tender, and so on. Customers will then have a consultation with an expert lender to discuss this process, and what else they must provide.

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Documents Needed

The required documentation for a construction loan are generally the same as those for any home loan application. This includes identification, proof of income, asset and liability statements, and so on. You’ll also provide proof of builder’s license, bank details, and insurance information, amongst other documentation. What’s required may vary depending on whether you’re applying for residential or commercial construction loans.

Valuation Requirements

When it comes to construction loans for home builders, a valuation must be conducted. This ensures the construction loan matches the value and costs of the property being developed. Lendees will be required to provide copies of the property plans. This must outline property expenses, budget, costs, and so on.

Insurance

Lenders will require that you have building insurance in place for the duration of the land and construction loans. This both protects their interest in the property and ensures that you can repay the loan if something goes wrong.

What Happens When The Construction Period Ends

Is your new home finally complete? Congratulations! Now the construction loan will need to be closed and you’ll need to take out a standard home loan. The bank will reappraise the property and lend you the amount that they think it is worth. This is usually 80 – 90% of the completed value of the property. Once the project is finished, and all progress draws have been completed, you’ll begin paying off the loan in full.

Construction Loans For Bad Credits

Break Free Home Loans understands that every lendee has different needs. A bad credit experience won’t automatically exclude you from construction loan eligibility. Our mortgage experts can talk through your situation to see if we can come to a suitable arrangement. Get in touch with us for more information about this.
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Long Term Vs Short Term Loans

Construction loans are available in both long and short terms. Long-term construction loans will have lower interest rates, however, they take longer to approve. This is because the bank must be sure that you can service the loan over an extended period of time. Short-term construction loans will have higher interest rates but can be approved faster. Deciding on whether to get along or short-term loan entirely depends on your individual needs. Get in touch with us to find out more.

Compare Lenders On Construction Loans In Melbourne

Construction loans in Melbourne can be difficult to compare. This is because most lenders will offer different rates, terms, and conditions. It’s important to do your research and ask around before making a decision about who to go with. At Break Free Home Loans, we compare construction loans from a range of different lenders so you don’t have to. Our team is committed to getting you a construction loan that fully meets your needs. Contact us for more information.

Bottom Line

Construction home loans help turn ideas into reality. Break Free Home Loans can help with every step of this process. Our lending specialists have the knowledge and experience to help you secure a loan that meets your needs. Also, our specialists will help you develop a clear plan for your loan so that you receive maximum benefit.
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Need a Consultation? Speak To Us!

Our team of lending specialists is available to answer any questions you may have about this process. Contact us today on 1800 300 777 for an obligation-free consultation about a construction loan. We can walk you through the whole process, and help you tailor a loan to suit your needs. Get in touch to find out more!

FREQUENTLY ASKED QUESTIONS

What Is A Construction Loan?

A construction loan is a loan that helps cover the costs of building or renovating a property. Construction loans can be used to build a new home, or make additions and repairs to an existing property. They are typically short-term loans, with terms ranging from 12 months to 36 months.

What Is The Eligibility Criteria For A Construction Loan?

Lendees must fulfill several requirements to qualify for a construction loan. Firstly, they must be able to make a down payment for a percentage of their property. They must provide relevant documentation, clear property construction plans, permits, and so on. You will also need to provide the council approved plans. Get in touch with us to find out more about the specific eligibility requirements.

What Are The Repayment Terms For A Construction Loan?

For a construction loan, the regular Principal and Interest repayments generally begin once your home is nearly completed. This typically takes between one to two years. The repayment period for a construction loan is usually shorter than a standard home loan. So, you’ll need to be prepared to make higher repayments.

How To Get The Best Loans For Construction In Melbourne?

It is crucial to get a construction loan that thoroughly meets your needs. To ensure success you should be looking for a specialist construction loan provider. They can work with you to create a tailored solution. Our team of lending experts specialise in construction loans for home builders. We understand that no two projects are the same, which is why we offer customised solutions to suit individual requirements.

What Is The Most Common Type Of Loans For Construction?

There are several different types of construction loans, with each one serving a specialised purpose. Some of the common construction loans include the construction to permanent loan, owner-builder loan, renovation loan, and construction -only loan. What loan is best suited to you will be entirely dependent on your needs. For example, the Renovation Loan is ideal for people who purchase an older property, with plans to fully refurbish it. Contact the experts at Break Free to find out which type of construction loan is best suited to you.

Contact our team

We love to hear from each and every one of you. Please feel free to reach out to us today!