All Topics / Value Adding / construction loans

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  • Profile photo of ian_from_brisbaneian_from_brisbane
    Member
    @ian_from_brisbane
    Join Date: 2003
    Post Count: 97
    May 13, 2005 - 8:07 am

    Hi!

    I have a block of land at the moment which I have a loan for and I am planning to get a loan to build a house on it.

    I was wondering if someone could explain how a construction loan works and specifically, at what point do the two loans become one? (land loan + construction loan = normal home loan?)

    Thanks,
    Ian

    Profile photo of brahmsbrahms
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    @brahms
    Join Date: 2004
    Post Count: 485
    May 16, 2005 - 6:04 pm

    ian from brisnyland

    its a pretty streamlined approach, usually the existing loan continues as is – the construction loan is drawn down 4-5 times paying the builder as per stages completed, interest only on most const. loans, until final payment is made and house complete.

    generally the two loans can be combined and you continue paying either i/o or p&i.

    cheers

    brahms
    Purveyor of Fine Finances
    aka Mortgage Broker Brisbane

    Profile photo of Robbie BRobbie B
    Member
    @robbie-b
    Join Date: 2004
    Post Count: 2,493
    May 17, 2005 - 3:21 am

    It may even be cheaper to refinance your existing land loan into a construction loan. Check out the various options through your broker.

    Robert Bou-Hamdan
    Mortgage Adviser

    http://www.mortgagepackaging.com.au

    Investor Links

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