Construction loan

A construction loan can be a great way for people who want to build their own home to get the funds to do it. Lenders typically will not allow you to fund a construction project with a normal home loan / mortgage. There are other commercial loan options but they are generally more expensive. However, a construction loan has interest rates that are similar to a home loan but are specifically tailored for a construction project. For a normal construction loan, the lender will require that you have a fixed price build contract. This means that you have a set price that the construction project will cost. The bank will also review the contract to see if it is suitable, however this process will cost you some fees. Another advantage of construction loan is that is is payed out in stages. In this way you only pay interest on the amount that you have spent on the construction to date. 
The construction loan process can be a bit more complex than a normal mortgage, you can find out more about the construction loan process

It usually good to go to a good mortgage broker that specialises in construction loans as you don't want to have a problem that can delay your project and be costly.


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