What are the steps involved for a construction home loan?
One thing people often don't consider when approaching the Surfers Paradise property market is construction. After all, there are so many amazing properties spread across the region, it's usually possible to find something that suits your needs. However, the possibility of removing any doubt and building your own dream home from scratch is always an option – and could be something to consider for your own real estate needs in the near future.
Of course, first things first. You need to organise your finances. Unlike apply for a regular mortgage, the process of applying for a construction home loan is a little more involved. The first thing you need to to is finalise the purchase of your land. Much like when you're buying a home, take into consideration things like the surrounding neighbourhood, the local amenities and any other things you've always wanted to be near your dream home.
Furthermore, don't just focus on the size of the lot. The shape and slope can make or break a construction project, and you don't want to be unpleasantly surprised by finding out you're unable to create a certain aspect of your design due to the land.
Following this, you'll need to select a registered Master Builder to undertake your construction project. There are a lot to choose from, but it's important to get this aspect taken care of early. Working with them to develop your building plans is essential, because you need to be able to show these to a lender before you'll be able to secure a construction home loan. When you go to a lender, you'll need to show them these plans alongside a fixed Housing Industry Association/Master Builders Australia building contract.
These documents provide a break-by-break of every stage of construction and shows the financials of each aspect, allowing the lender to see exactly where the money is going and what it's being used for. Not only this, but being able to see this yourself is a great way to rationalise the project. Being able to see the plans, how much everything will cost, the various stages of construction and much more at a glance is comforting – especially for first-time buyers.
Another thing to remember before this is to seek the appropriate government approvals as well. These will most likely be your local council signing off the on the project, after ensuring there are no risks involved for either you or the local community at large. Another thing that you will likely have to show the lender is a copy of your insurance policy. By proving you're both willing and able to protect their interests will be a big help in the long run.
Once you've got the construction loan, things are ready to kick off! The funds will be trickled down to you between building phases, with property inspections undertaken at the end of each part to ensure things are all in order and that the project is ready to move onto the next phase. This is also another thing that can be comforting to you as a buyer, having a third party coming in to verify the progress and sign off on the construction project's validity.
And finally, when your dream home is completed, your construction loan will transform into a variable-rate mortgage. This product acts just like a regular home loan, where you can start making repayments on the remaining balance – all from the comfort of your own new home.
If you're interested in building your own Surfers Paradise property, get in touch with a local real estate agent to discuss the various options available to you in the region today.