The secret to saving money while building your dream home
Building a home or carrying out serious renovations on your existing home allows you to have a major say in the environment your family lives in. Unfortunately it’s also an expensive undertaking, which is why it’s important to seek the right type of home loan.
A construction home loan allows you to draw down on funds when your builder requires them at each building stage. This means you avoid paying interest on any loan amounts you haven’t yet drawn down.
The loans.com.au Construction Home Loan is a low cost construction home loan which allows you to draw down on payments up to five times, and comes with a range of features designed to save you money, including interest only payments.
| Product Name | loans.com.au Construction |
|---|---|
| Interest Rate Type | Variable |
| Comp Rate^ (p.a.) | |
| Minimum Loan Amount | $50,000 |
| Maximum Loan Amount | $1,000,000 |
| Maximum Loan Term | 30 years |
| Maximum LVR | 80% |
| Maximum Insured LVR | 90% |
| Mortgage Offset Account | No |
| Fixed Interest Option | No |
| Loan Portable | No |
| Suitable for Investment | Yes |
| Available as equity loan/line of credit | No |
| Repayment Type | Interest Only |
| Application Fee | $0 |
|---|---|
| Lender's Legal Fee | $0 |
| Valuation Fee | $220 |
| Ongoing Fees | $0 p.a. |
| Settlement Fee | $300 |
| Discharge Fee | $300 |
Pros
- Have a maximum LVR of 90%
- Borrow up to $1000000
- Offset account available once construction period ends
Cons
- Construction administration fee of $120
- Settlement fee of $300
Things to consider about the loans.com.au Construction Home Loan
The Construction Home Loan is available for owner occupiers building a home, and investors building an investment property. Once construction is completed your loan will revert to the variable rate Home Loan.
It’s a full documentation loan, meaning that to be eligible you must be able to supply the full range of income evidence and documents including payslips. If you require a low doc loan, you might want to start a comparison on our low doc page.
Bear in mind that before you apply for this loan you’re required to have:
- Purchased your land
- Chosen a master builder
- Finalised your building plans
- Received a copy of your building contract, which must be a fixed price contract (meaning your builder has allocated a fixed price to each building stage)
Once this is completed, you’ll be able to draw down at each of the five stages of building your home, including:
- When the slab is down
- When the frame is completed
- At the lock up stage
- At the fixing stage
- At completion
Features of the loans.com.au Construction Home Loan
- Maximum loan amount. You can borrow up to a maximum of $1,000,000 with this loan, and a minimum of $50,000.
- Maximum LVR. There’s a maximum LVR of 90% with the Construction Home Loan, but keep in mind that borrowing with an LVR of greater than 80% will come with Lender’s Mortgage Insurance (LMI) charges.
- Construction features. As mentioned, this loan comes with the ability to make drawdown payments to your builder at the five stages of building. Keep in mind also that this loan covers a maximum construction period of 12 months.
- Interest-only payments. This loan only requires you to make interest-only payments during construction, helping you maximise your cash flow during this expensive time.
- Offset account. There's an offset account available with this loan, although it should be noted that it's only available once construction is complete and the loan rolls over to the loans.com.au Home Loan.
Why can I trust loans.com.au with my home?
When you take out a loan with loans.com.au you're in safe hands. loans.com.au is funded by Firstmac, a leading Australian lender with $8 billion in mortgages under management, as well as more than 35 years experience. Add to this the fact that loans.com.au is regulated by almost all of the same laws as a regular bank.
Fees
Fees you can avoid
- Ongoing fees. $0. There are no monthly or annual fees charged by this loan.
- Legal fees. $0. The Construction Home Loan doesn’t charge legal fees.
- Early discharge fee. $300. You’ll have to pay this fee if you pay your loan out early.
Fees you can’t avoid
- Settlement fee. $300. You’ll be required to pay settlement fees to finalise your loan application and receive your funds.
- Construction admin fee. $120. This extra fee is charged to cover the associated costs loans.com.au will incur as a result of this loan.
- Progress inspection fee. $110 per stage. loans.com.au will require an independent valuer to visit your property during the construction and ensure that your builder has finished the work detailed in their invoice. The total cost of this over the five stages is $550.
Are there any hidden fees with this loan?
The loans.com.au Construction Home Loan fees are mentioned above. Note that there are still some charges you might have to pay which are not factored in above or in the comparison rate. These include the $10 fee for ordering statements, and also any government fees which are charged.
Note too that the valuation fee is $220, or at cost, which means depending on your situation this fee could be higher.
Who is loans.com.au owned by?
loans.com.au is an online-only non-bank lender. They're a privately owned mortgage company and are 100% Australian owned. In addition, loans.com.au is underwritten by Firstmac, a large Australian mortgage company with $8 billion in managed mortgages and over 35 years of experience in the banking industry.
How to apply for the loans.com.au Construction Home Loan
To apply for this loan or find out more, click the ‘Go to Site’ or ‘Find out more’ buttons on this review page. This will safely take you to the loans.com.au website, where you can fill in some basic details and speak to a loans.com.au representative about your loan. loans.com.au has an easy-to-understand diagram included below which summarises the whole application process.
The below diagram is courtesy of loans.com.au and represents the loan application process after you contact them.
When applying for this loan, loans.com.au will want to know if you can afford your repayments, so they will want the following details:
- Income information. loans.com.au will want to know your current income and details about your employment.
- Debt information. Before granting you a loan, loans.com.au will require you to give them information about your current debts.
- Personal information. You’ll also be required to provide loans.com.au will identification and contact information.
The loans.com.au Construction Home Loan could see you get into your dream home without hefty fees or features you won’t use. Add it to your comparison today.
