Construction loans work differently to traditional home loans:
Progress Payments: You don't borrow the whole construction amount from the lender up front. Instead, you simply draw down progress payments as the build progresses. Interest Only: During the construction phase, you only pay interest on the amount of funds you have drawn down. Once the construction is complete, the payments will convert to Principal & Interest. Deposit: You will still need to pay a deposit like a normal loan, the lender will only offer an LVR within their normal limits. If the LVR exceeds 80% you will need to pay LMI as well, just like a loan for an established property. Understanding how construction loans work can save you time and money. Contact us today to discover which lender and loan product is right for your next build.