There are plenty of products out there for the aspiring first, second or umpteenth home loan seeker. But when you’re buying from somebody else, you often have to make concessions. Maybe they aren’t as close to the shops as you’d like, perhaps the property doesn’t have enough bedrooms – even something like wanting a bigger backyard could tempt you towards that most serious of commitments: the construction of your own dream home.
It’s a completely different world when it comes to building. You’re having to deal with concepts and terms that even the most seasoned property investor would be unaware of. How long will the build take? What are the local planning codes? How do you choose the right construction company? Where on earth are you going to get the investment capital?
Thankfully, if you’re responsible for one of the 200,000 or so building approvals the Australian Bureau of Statistics record per year, the capital is where we have you covered.
Construction loans: a suitable proposition
One of the main benefits of building instead of buying is your access to specialised construction loans. These work by allowing you to draw only what you need for that particular stage of construction. So if you need $50,000 for the purchase of some vacant land, that’s what you draw, and that’s all you pay interest on.
Once you get to actual construction, you can draw another sum to pay for the services of your builder. At each major stage, you can keep drawing only what you need and only pay interest on what you have drawn so far, instead of the whole lot at once.
That way, you have to spend a lot less over the life time of your loan and can invest it back into your brand new home!