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Tips For Finding The Best Construction Loan

Looking for the best construction loan | Financial Information | Tiger Finance

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Looking for a construction loan can be confusing. It can be hard to known what kind of loan you need, and what to look out for. Generally, having a good builder on your team will make your life during construction much easier, as well as making sure you have everything organised and ready to go when you begin the application process. Doing plenty of research when looking for construction loans will also be helpful.

Read on below for tips on finding the best construction loan for your build.  

How does a construction loan work?

A construction loan is a type of home loan aimed to assist those who are building from scratch. It does not with the same way as a regular home loan, as home loans can only be used to buy an existing property. A construction loan covers the costs of the building process itself.

In a construction loan, payments will not be made to you in one lump sum. Instead, your lender will usually pay you in progress payments – that is, one payment for each stage of construction. Your builder will issue an invoice at each stage of the build, which you then pass on to your lender in order for the payments to be made.

You may need to have a deposit ready in order to cover the initial cost of the materials needed to begin the construction process, although this will depend on your lender.

Engineers at a development site | Financial Information | Tiger Finance

Tips for finding the best construction loan

Finding the right construction loan can be difficult if you aren’t sure what to look for, or what will work best for you. The best place to start when looking for the best construction loan is to do plenty of research. You might want to look at different types of loans, and see what might work best for you and your build. You might want to research loan terms, and see what kind of interest rates you might be able to qualify for.  

Once you have your loan, there are things you can also do to make the construction process easier, such as working with a qualified builder. It may seem obvious to begin with, but a builder that is experienced and knows what they are doing will be immensely helpful.

Not only will your builder be able to stay on top of the construction process, but they can also be an invaluable source when it comes to what to include in your quotes for your lender. An experienced builder will have been through this process many times and should be able to help you with what to expect when it comes to compiling your details.

Planning for the unexpected will also make the entire process easier. Construction projects are notorious for delays and sudden issues, and you should plan for these as best you can, both time-wise and financially. This means not planning to spend every dollar that your lender gives you, and allowing enough time for any issues to be solved. Planning for these delays might mean that you make your experience with construction easier.

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How to get approved for a construction loan

In addition to the usual forms of identification needed to apply for a loan, you will need a few extra documents before you begin the application process with your lender.

  • A building contract is potentially the most important document of all. It should outline every construction stage in great detail and the payment schedule for the stages of construction. It should also include a detailed timeline of the construction work and the costs of the overall build.
  • A building plan is the blueprint of your future home. It should include both the layout and dimensions of your house when it’s finished.
  • Quotes from your builder will also be necessary for your application. Your lender will need the estimated costs of the build, plus any additional costs such as swimming pools and landscaping. Lenders will usually look at these items and decide if they add extra value to your home.
  • Your lender will also need documents relating to your income and expenses, and any assets and investments that are in your name. These are fairly standard when applying for any loan. Your lender will need to make sure that you have a stable employment history and income stability in order to ensure that you have the ability to repay your loan without any problems.

How to avoid hassles with your construction loan

  • Provide all construction loan documents upfront – Missing documents could result in delays
  • Make sure you provide the final version of your contract – Any time the cost of construction changes, your lender will send someone out to the property again to inspect and reassess the valuation, no matter how little the change
  • Plan in advance – It might seem easy enough to make some small changes as you build, but if it impacts the contract price, you might need to take out a top-up loan to pay for the difference
  • Include additional work with formal written quotes – If you choose to hire contractors separate from your builder, talk to your lender and provide them with quotes at the loan application stage. The loan may be able to be extended to cover the additional costs
  • Pay for the unexpected small things out of your own pocket – This eliminates the hassle of having to change the building contract. It may be easier to just pay for the small changes upfront yourself, rather than changing your contract regularly

Where does Tiger Finance come in?

With Tiger Finance, we can help to get you a construction loan in four easy steps. You will have a free consultation with one of our specialists, and we will tailor-make you a loan. We will negotiate with lenders on your behalf before you are approved.

We have helped countless Australians get approved for a construction loan. We understand that lending criteria from other lenders are too strict, and can stop you from achieving your goals. That is wrong, and it should not hold you back.

How we can help

Our finance specialists can help you find the right construction loan for your project. Construction finance is a complicated topic, but we will find a loan that makes your dream project that much easier.

If you are one of the many Australians finding getting a construction loan difficult, Tiger Finance can make the process simple and pain-free. Call us today for your free initial consultation with one of our loan specialists.

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