Home Construction Loans on the Gold Coast

The amount you can borrow with a construction loan will depend on a variety of factors, such as your income, expenses, and the value of the property. Lenders will typically lend up to a certain percentage of the property’s value.

Generally, interest rates for construction loans tend to be higher than for regular home loans. This is because they are considered riskier by lenders. This is because the loan amount is paid out in stages, rather than in a lump sum, and the lender is exposed to the risk that the construction project may not be completed on time, or that the borrower may default on the loan.

The interest rates for construction loans can vary depending on several factors, including the size and complexity of the project, the borrower’s credit score and financial history, and the lender’s policies and lending criteria.

Construction loans can come with a range of fees and charges that borrowers should be aware of when considering their options. You will be asked comply with application fees which conver the cost of processing and assessing your loan application. It can range from a few hundred to several thousand dollars depending on the lender and the loan amount. Then there’s the valuation fees that cover the cost of having the property valued to determine its market value, progress payment fees for assessing the progress of the construction project and making payments to the builder, and discharge fees for when you repay the loan in full or refinance with another lender. It covers the cost of discharging the mortgage from the property title.

A construction certificate is a document that confirms that the proposed building work complies with the relevant building codes and regulations. It is usually required by the lender before a construction loan can be approved.

When building a home, it’s not uncommon for the homeowner to want to make changes to the plans during the construction process. Making changes can impact the cost and timeline of the project, so discuss any changes with your lender and builder. Your lender will need to assess any changes to the building plans to ensure that they are still in line with their lending criteria. Changes could also impact the progress payment schedule, which can lead to additional fees or delays in the construction process.

Your builder will also need to assess any changes to the building plans to ensure that they are feasible and can be completed within the agreed-upon timeline. They will need to factor in any additional materials, labour, or time that may be required to complete the changes.

If the construction costs exceed the loan amount, you will need to fund the additional costs yourself. This is known as a cost overrun and can be avoided by accurately estimating the total cost of the project before applying for a loan.

Yes, you can use equity in an existing property to fund a construction loan. This is known as a line of credit loan.

Yes, but make sure to read the terms and conditions of your loan agreement. Some construction loan agreements may include early repayment fees or penalties if you pay off the loan before the agreed-upon term. These fees or penalties are designed to compensate the lender for the interest they would have earned if you had continued to make regular repayments until the end of the loan term. You should also consider any potential tax implications or other financial considerations that may apply.