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A Loan Market adviser can assist you with financing for various needs such as purchasing land, building a new home, buying an off-the-plan property, or house-and-land packages. They can also guide you through your options for major home renovations.
Land and construction loans generally operate as an interest-only facility with a variable interest rate during the construction period, before reverting to the standard home loan package you have negotiated with your lender. During the building or construction period, you only pay interest on the part of the home loan that has been drawn down, or paid out.
If you use a fixed-rate construction loan, you may end up with one rate on your land loan and a second, different, rate on your construction loan.
Approval for a land and construction loan is a little different to approval for an established home. Often the land and building purchase will need to settle separately. To accommodate this, your initial loan will be run as two separate but simultaneous applications, one for the land purchase and the second one for the completed house and land cost. The second application will eliminate the first loan, leaving you with just the one loan.
Most lenders will also require that you build on your land within two years of actually settling on your land. You don’t need to finish the home within the two-year time frame, you just need to start within two years of settling on your land.
If you’re looking at a house and land package, you will generally use a regular residential home loan and not a construction loan to finance your purchase.
The construction of your home or completion of your major renovation will generally be conducted in stages, with payments required at the end of each stage. Your construction contract will detail the exact cost of the build, with the cost broken down into the payments the builder requires at each stage.
As each stage of your home is completed, the builder will invoice you for that stage. Assuming you are happy with the work, you will submit that invoice, along with an authority from you instructing your lender to pay the builder, to your lender for payment. For major construction, your lender will generally also inspect the property and may value the property at each stage to ensure you will have sufficient funds to complete the process. Once all parties are satisfied, your lender will then pay your builder on your behalf.
The bank or lender only charges you on the amount of money you have drawn down, therefore your minimum repayment will vary depending on which stage your home has reached.
The type of renovation loan that is right for you depends on the size of the project. If you do not have the money to fund the project outright, your Loan Market adviser can talk through the following options to find the right one for you.
Your options could include:
Let us know what your goals are and we will connect you with a Loan Market adviser directly.
Understand how much money you have coming in compared to what you spend using this calculator to help you identify where you could save.
Understand the amount you will need to pay your lender before you apply for a home loan and ensure you can comfortably meet your repayments.
Determine your repayments and the total amount of interest you are likely to pay.
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Company Number: 4313118 | NZ Financial Services Group Limited (FSP286965)
The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.
*Your adviser may charge a fee to cover additional time required by their team. Any fees will be discussed with you in advance so you can make an informed decision before proceeding with your application.
