Homestar Finance Construction Loan Review

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Enjoy no ongoing fees and take the stress out of building a home when you apply for a Homestar Finance Construction Loan.

The Homestar Finance Construction Loan charges no ongoing fees and only requires interest only repayments while you are building your home. Available with a competitive variable rate, the loan is designed to give you control over your construction project and make it easier to manage your finances.

If you’re looking to buy an established home instead of build one, Homestar Finance offers Fixed Rate and Variable Rate Home Loans that also do not charge any ongoing fees.

Things to consider about the Homestar Finance Construction Loan

As the name suggests, this loan is only available for construction projects. Designed to help you purchase vacant land and then finance your building project, this loan requires you to commence construction within six months of taking out your loan and complete it within 12 months of the initial withdrawn date.

During the construction phase, a special variable interest rate applies and borrowers are only required to make interest-only repayments. Once construction has been completed, the loan reverts to Homestar Finance’s standard variable rate product and principal and interest repayments will then begin.

Features of the Homestar Finance Construction Loan

  • Maximum loan amount. The maximum amount you can borrow with the Homestar Finance Construction Loan is $750,000, while the minimum loan amount is $50,000.
  • Maximum LVR. This loan allows a maximum LVR of 90% with any loans with above 80% LVR, lenders’ mortgage insurance (LMI) is required.
  • Interest rate. The Homestar Finance Construction Loan features a construction variable rate during the building phase and then reverts to a standard variable rate once construction is completed.
  • Repayments. While your home is being built, you are able to make interest-only repayments on your loan, and additional repayments are allowed during this time. Once construction has been completed and the standard variable rate applies, you can start making principal and interest payments and can continue to make additional repayments.
  • FHOG. If you are eligible for a First Home Owners Grant (FHOG) payment, Homestar Finance can help you lodge your application.

Fees

Fees you can avoid
  • Account keeping fees: $0
  • LMI: No LMI is required if you borrow less than 80% LVR.
Fees you can’t avoid
  • Application fee: $0. You’ll need to pay this fee to cover the administrative costs of setting up your loan.
  • Construction admin fee: $300 plus third party costs. Construction loans require a valuation to be completed at each stage of the building process.
  • Discharge fee: $535, plus third party costs. This covers the expenses associated with preparing your loan discharge documents.

How to apply for the Homestar Finance Construction Loan?

You can fill out an enquiry form online or call Homestar Finance to discuss your borrowing requirements.

In order to apply for this loan, you’ll need to be an Australian citizen and at least 18 years old.

You’ll also need to have a clear credit history and if you’re a PAYG applicant, you’ll need to:

  • Have been working for at least one year
  • Provide evidence of your income in the form of payslips and tax assessment notices
  • Provide a PAYG payment summary

Self-employed borrowers will need:

  • To have been trading for at least two years
  • To provide evidence of their regular income
  • A registered ABN

In addition to the normal proof of income, applicants will also need to provide the following:

  • A signed and dated fixed price building contract
  • A progress payment schedule
  • Council approved construction plans
  • Quotes for any additional work the loan will fund which is not included in the building contract
  • Builders insurance (contract of works)

If you want to buy a block of land and build your dream home, the Homestar Finance Construction Loan could be the ideal mortgage for you. Just make sure to compare its features with those of other loans on the market to ensure that you get the best deal for your situation.

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This page was last modified on 28 March 2017 at 1:03pm.

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