Is a lender wanting to build dream home or renovate their property? Construction (i.e., house and land) loans are available for lenders that are owner-builders! With this loans structure, the lender will only pay interest during your construction stage, whether it is a single dwelling or as many as four dwellings on a single title.
Start by gathering the necessary documentation. First, a lender must compile their financial documents, including recent pay slips, currently available savings, and last year’s tax return. Next, lenders will need to consider their deposit amount, if applicable. Then, lenders will need to get a building contract that details building stages, project milestones with corresponding starting and finishing dates, the overall expected completion date, and the final price to build or renovate. It would be in the lender’s best interest to receive itemised quotes for each service provided from the construction team, including the costs of the [required] registered builder, architect, project manager, plumbers, electricians, and other sub-contractors. Building specifications, such as the materials used to build or renovate your home, will also need to be noted and priced. Lenders will need to retrieve other documents, including council plans, permits, and insurance provisions.
Valuation requirements. Paperwork is required for “as if complete” quantity surveyor to ensure that the construction loan will cover the expected costs and review that services and stages abide by industry standards set forth by the Master’s Builders Association or Housing Industry Association.
Setup repayments. Lenders can choose a 12–24 month fixed period to complete their construction project. A construction loan requires the lender to obtain a registered builder on a fixed-priced contract, then the mortgage broker will disperse payments once certain agreed-upon milestones have been met so as long the lender is current with interest payments.