The cost of purchasing a home today in Australia is quite
expensive, whether you purchase an existing home or build your own customized
home. It is time to consider taking
construction finance, when lack sufficient finance to purchase a new house in
Australia.
Construction finances are becoming very popular than ever and
many borrowers are selecting such finance to build their new home in Australia.
It is important to understand that not
all construction finance are created equal and nor they offer the same benefits
across the board. It would be better to
do your research on construction loans
first that will ensure that you find the best construction finance that fits
your precise or diverse housing needs.
What is construction
finance?
It is an interim, short-term finance for financing the cost
of construction of your new dream home in Australia. Credit providers or
lenders provide the borrowers loan that is secured over the real estate
property that you are financing. After approval of the loan, borrowers make
regular and periodic payments to the builders at fixed intervals of time as the
construction work processes.
How is construction
finance funded?
Lending agencies in Australia have different credit approval
polices and requirement that they precisely adopt when they are processing a
construction loan application. This part
of the post discusses how a construction loan is funded by the lenders or
credit providers in Australia.
You will get the funds from the lenders or credit providers
in order to cover the total cost of buying a vacant land. They also provide
funds for the purpose of building construction cost on that vacant land.
Some people borrow money even before the actual transactions
of the property has taken place. In such situations, the first loan
disbursement made by the lenders or credit providers will directly go towards
paying off the vacant property land.
Credit providers or lenders effectively break down the
finance amount into “progress payment drawdown” amounts that are made to the
builders at the time of completion of each and every construction stage of the
building.
When are progress
payments drawn down?
Before the process payment is made to the builder, the credit
providers or lenders will effectively arrange for preparation of
valuations. At each stage of
construction, the borrowers receive a specific amount of money by the lenders
or credit providers.
Ø For the purchase of the vacant land
Ø After the laying of the flooring
Ø After the installation of the roof
and including the frames
Ø At lock-up stage, and
Ø At the completion stage
