Is a Construction Loan Harder to Get Than a Mortgage?
Lenders are indeed more conservative with a construction loan than a mortgage. Most mortgages finance a first-time homebuyers purchase. Since it’s in the best interest of the government to help Australians become homeowners in any Australian housing market conditions, they’re willing to back the loans. First-time homebuyers pose a risk, but the government’s backing of the loans allows lenders to fund the purchases.
The government doesn’t offer lenders protection for construction loans, especially since many tend to be investments as opposed to principal places of residence. Construction loans pose the most risk during the construction phase. Many variables can go wrong. There are cases when the home is never built nor started. If the plans fall through, lenders don’t have a way to recoup funds that were released. Sometimes an individual cannot procure the necessary permits, so the project never gets off the ground.
Construction loan funds are dispersed in increments, and the funds consist of strict parameters. The loan can only cover expenses related to the construction of the home. In some scenarios, the applicant can use the funds to pay for the land.
These are details that our loan specialists cover with applicants. Mortgage House takes pride in offering innovative solutions to applicants and investors.
Obtaining a Construction Loan Conclusion
Even though obtaining a construction loan poses more challenges, Mortgage House helps applicants achieve their financial goals. If a construction loan becomes too high risk, our loan specialists find alternative solutions. They’re also well-versed in the car and business loan areas. For more information, contact us today.