What Is a Progress Loan?
Some loan products have more than one name. The progress loan is another name for the construction loan. This loan has a specific purpose. It finances materials, labour, and permits for construction projects.
Owner-builders prefer to build their primary residence instead of purchasing a home from the existing inventory. Since the property does not exist, lenders use a specific product to help them finance it. They issue construction loans instead of mortgages.
The construction loan has distinctive features. It lasts the length of the construction project. Thus, between six to 12 months. During the construction period, the borrower can pay the interest rate charges. Moreover, the applicant becomes responsible for the total amount disbursed not the amount approved.
Instead of releasing a lump sum, lenders release payments in increments based on the project’s construction. If the borrower intends to live in the home and turn it into their primary residence, an option to roll the construction loan into a mortgage exists.
When the applicant applies, they must submit their building plans and timeline. This helps the loan specialists set up the anticipated disbursement dates. It takes them five to 10 business days to send the payments after the borrowers make the formal request.
Mortgage House funds an array of projects and home purchases on the Australian housing market. We also offer several online resources to help borrowers prepare beforehand.
Progress Loan Conclusion
A progress loan is another name for the construction loan. Owner-builders and investors interested in procuring a construction loan from Mortgage House can contact our loan specialists.