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You can apply for a construction home loan if you are renovating your current home or building a new home. The application for construction loans requires the same documentation you need for standard home loans. However, to assess the loan amount, lenders also require you to provide any additional work quotes and a copy of the contract outlining materials, labour costs, length of the project and the estimated final project cost.
Construction home loans use a progressive drawdown payment method. After different construction phases are completed, your contractor will request payment and the lender will release payment directly to the contractor. Traditionally, payments are released after the following stages:
Funds to complete is a calculation assessed by your home loan lender after reviewing all your project details, including the contract, other quotes, and your land cost. This formula is designed to calculate how much personal cash is required from the customer to commit to the building project in the earlier stages. Your mortgage provider then completes the building project. Hence: “funds to complete”.
Mortgage House and our team of brokers can help you find a construction loan that is right for you. We can help you with your application and ensure that your loan will cover the cost of your project without having hidden fees.