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Property Finance –
Construction Home Loans
• Helps you cover the construction period, usually
for a maximum period of 12 m...
3 Phases of Construction
Loan
1. Land Acquisition
– LVR can range from 60% - up to 95%
2. Construction Loan
– Planning Per...
Construction Loan Basics
• Client only pays interest on the funds actually used.
• Interest only payments until constructi...
4 Steps to construction loan
1. Loan application to purchase a vacant block of land
– Max LVR 95%
– Pre-Approval requested...
4 Steps to construction loan
4. The lenders valuer / QS will typically make only two
inspections, one at mid-construction ...
Examples
• Assumptions
– In both instances the clients are first home buyers who qualify for
FHOG.
– Clients have a contra...
Purchase Vacant Land & Begin
House Construction within 12
months.
House & Land Package
Subscribe
• youtube.com/PositivePropertyPro
• youtube.com/PropertyFinanceGuru
Contact
• Home Loans
• Property Finance
• Mortgage Broking
• Construction Finance
• Property Development
• Property Develo...
Property finance   types of home loans - construction home loan - part 2
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Property finance types of home loans - construction home loan - part 2

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Understanding construction home loans & construction loans and how a construction loan can change through the 3 Phases of construction loan. The video explains some construction loan basics that the client must understand and finally the video goes into discussing the 4 Steps to construction loan. The video also discusses two examples of a construction loan, namely, a construction loan when a land is purchased initially and then construction is commenced and later the construction loan is converted to either a property investment loan or a normal home loan. In the second example, the construction loan is given as a house and land package and the entire loan is clubbed into one construction loan. Check out the video for detailed examples.

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Property finance types of home loans - construction home loan - part 2

  1. 1. Property Finance – Construction Home Loans • Helps you cover the construction period, usually for a maximum period of 12 months. • Stages of Construction – Base Stage or Slab Stage – Frame Stage – Lock Up – Fit Out or Fixing Stage – Practical Completion • One construction is completed, you can revert to a normal home loan.
  2. 2. 3 Phases of Construction Loan 1. Land Acquisition – LVR can range from 60% - up to 95% 2. Construction Loan – Planning Permit – Building Permit – Fixed Priced contract with the builder – On Completion valuation 3. Post Completion – Switch or revert to another predefined loan • Condition: Construction to commence within 12 months.
  3. 3. Construction Loan Basics • Client only pays interest on the funds actually used. • Interest only payments until construction is completed whereupon it converts to principal + interest (either variable or fixed). • Client must use their own source of funding initially towards the purchase of the land & if FHOG is used, it typically goes towards the first progress payment. • LVR can be up to 95% of “on completion” valuation. – Most lenders only lend against the price of land + cost of construction, however, some will refinance the house and land as a package.
  4. 4. 4 Steps to construction loan 1. Loan application to purchase a vacant block of land – Max LVR 95% – Pre-Approval requested 2. Builder Selection – Builders Certificate – Home Owners Warranty Insurance – Fixed price contract – Builders schedule of progress payments 3. Progress Claims by the builder 1. Base Stage or Slab Stage 2. Frame Stage 3. Lock Up 4. Fit Out or Fixing Stage 5. Practical Completion
  5. 5. 4 Steps to construction loan 4. The lenders valuer / QS will typically make only two inspections, one at mid-construction and one on completion. Once he has made his “on-completion” inspection, the client must make his inspection and give authority to the lender to make the final drawdown from the loan to the builder.
  6. 6. Examples • Assumptions – In both instances the clients are first home buyers who qualify for FHOG. – Clients have a contract of sale and full plans and specifications for building. – The clients have genuine savings to put towards their project and have additional funds to cover miscellaneous costs.
  7. 7. Purchase Vacant Land & Begin House Construction within 12 months.
  8. 8. House & Land Package
  9. 9. Subscribe • youtube.com/PositivePropertyPro • youtube.com/PropertyFinanceGuru
  10. 10. Contact • Home Loans • Property Finance • Mortgage Broking • Construction Finance • Property Development • Property Development Finance • Any kind of finance, including car loans, personal loans etc • Call – Amber @ 0488 998 072 • www.positivepropertypro.com.au

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