What is a Construction Loan?

Here at No1 Property Guide, we specialise in providing renters an opportunity to enter the property market with our no or low deposit house and land packages. And a big part of the finance for our packages is the construction loan, often referred to as owner builder loans. But many of our clients don’t know what a construction loan is. So, today we’re going to answer one of the most common finance questions we receive: “what is a construction loan?”

Darren Walters created No1 Property Guide to provide an affordable home option for renters across SE QLD, NSW and VIC. By utilising his unique pre-qualification system, we’re able to accurately determine your borrowing capacity. Without impacting your credit history while discovering your factual options. Giving you the opportunity to leave the rental market forever.

Contact our New Home Specialists today to learn more.

Simply put, a construction loan is a home loan where the funds are distributed in stages as the house is built. Each of the stages of construction will warrant a certain per cent of the funds. Until the final handover where the rest of the loan amount is paid.

Construction loans are a great option as it ensures builders aren’t being given the complete total upfront with nothing built. But aren’t having to complete the entire project to be able to pay for the materials or their staff.

How Do Construction Loans Work?

Basically, once all approvals and valuations have been confirmed, your lender will allow you to draw down on your finance as construction gets underway. After each stage of the build process, your builder will invoice you. You will then be able to access the appropriate amount of funds to pay the builder and continue the construction.

When you build your new home through No1 Property Guide, our builders will send you an invoice during each building stage. Along with pictures showing the process of the build. We are included in every email, so we can advise you on any potential issues as well as the general progress of the build.

When Do You Start Paying a Construction Loan?

Construction loans are a little different to regular mortgages. Rather than transferring the funds straight away, you will be making payments throughout the construction of your new home. So, you will make payments after each build stage.

Are Construction Loans Interest Only?

During the construction phase, your construction loan will be interest-only payments. This will mean you don’t pay off any of the principal of the loan at the start. But your repayments will be smaller and far more manageable throughout construction.

Do You Need a Deposit for a Construction Loan?

That depends if you’re building your new home through No1 Property Guide or not!

By using Darren Walters’ no or low deposit new home system, you might be able to get your construction loan with little to no deposit.

Each situation is different so there’s no one answer for what you’ll be able to do. The best way to discover your options is to complete our pre-qualification. This allows us to accurately assess your borrowing capacity to find all your factual new home options.

From there we can work with you to see where you can build your dream new home.

Can a First-Time Home Buyer Get a Construction Loan?

Absolutely! As long as you meet lender requirements, first home buyers are eligible for construction loans as well. Our New Home Specialists are experts in assessing your situation to discover what your factual new home options are.

Darren’s unique pre-qualification system will provide us with the information we need to discover your new home options. Whether you’re a first home buyer or not, our specialist team has the skillset to discover what your factual options are.

How to Get a Home Construction Loan

Getting a construction loan is as simple as enquiring with No1 Property Guide. Almost all lenders will have a construction loan option, sometimes called Owner Builder Loans. Our Mortgage Managers will assess your situation and tailor your application to ensure you fit lending criteria.

From there we’ll find the right construction loan to suit your budget and borrowing capacity. Our team of experts have a high rate of finance approval. In fact, we’ve had a 90%+ approval rating through Darren’s pre-qualification system.

Take the First Step with No1 Property Guide

Taking the first step might seem daunting, but with No1 Property Guide it’s simple. Darren’s unique pre-qualification process means your first step is to discover your borrowing capacity. No applications or credit checks, we focus on getting an accurate estimate of what you can borrow to start.

This allows us to know your factual new home options and calculate how we can help you get into your new home sooner.

Darren Walters has helped thousands of renters get into their own homes using this method. By combining his no or low deposit system, and his knowledge of lending policies, he can tailor your new home package to lending policies and increase your chances of getting approved.

Ready to take that first step? Then complete our pre-qualification form to get started. From there one of our New Home Specialists will work with you to discover all your new home options.