When planning to construct a home, many people do not understand the difference between the home loans and construction loans. This may seem like a minor thing, but the fact here is that it can actually make a huge difference in getting the best deals. This is why it is important to consult with a professional home loan broker. To make things easier, we connected with many professionals having specialization in construction home building loans Melbourne, and brought to you some things that you must remember when obtaining a construction loan.
Loan amount disbursement – Your home loan is disbursed once the initial down payment is made to the borrower. In most cases, the property owners (borrowers) demand a down payment amount of about 20% of the overall construction cost before disbursing the loan amount. However, the fact is that the initial instalment amount may differ from lender to lender and it may also depend upon the property mortgaged. It is very important to remember that the loan amount is always paid in instalments. Other things that may affect the instalment size include progress of construction, size of the loan and loan to value ratio (LTV).
Slow progress affects disbursement – Another important thing that can make a huge impact on the loan amount disbursement is the progress of your property construction. Lenders have pre-decided levels of construction progress for loan disbursement for construction home building loans Melbourne, so make sure to remember that you know everything about the loan disbursement before you opt for it. According to the professionals, lenders also have the authority to halt the instalments of the property construction loan if the construction activity is delayed or hanging.
Borrower can’t alter the construction plan – When you have obtained property home loan from a lender, it is important to remember that you cannot alter the construction plan that was initially submitted with the lender. Sometimes, property owners may want to change the same to make some improvements in the property, but it is not possible when you obtain a construction loan. You should have clear idea of the terms and conditions of the property construction loan plan. In case you plan to do the additional changes in the property plan after the loan approval, it may force the lender to freeze the loan and stop disbursement.
Cost of interiors is not included in the loan – Unlike the common belief; the construction home loan only covers the cost of permanent features of building a home. So, in case you are thinking that you can also get construction loan for improving the interiors of the home, you should go with other types of loan options like personal loan, home improvement loan, etc to enhance the internal appearance.
With the above-mentioned information in mind, you can make the most of your Construction Home Building Loans in Melbourne. A professional loan broker can be your ideal guide to stay aware of everything that you get with the construction loan.