Enquire about a loan now
Complete our online form to enquire about a loan now
Find your local Lending Specialist
Search for your local Citiwide Lending Specialist by suburb, postcode or by name
Try anyone of our online calculators for instant results
Business Construction Loans
A Construction loan is generally drawn down in stages as the builder reaches the different milestones stipulated in the Building Contract.
These stages are generally:
- The base stage (i.e. when the concrete slab is laid)
- The frame stage (i.e. when the framework or walls are up)
- Lockup stage (i.e. when the roof, door and windows are in place)
- Fit out stage (i.e. when the house has been fitted out with appliances)
- Completion (i.e. the house has been completed and is ready for occupation)
The lender uses an independent valuer to monitor the construction process and only makes progress payments when the builder has reached the defined stages and met satisfactory standards.
Most lenders only require interest payments on the loan during the construction phase. After completion the loan reverts to a standard Principal & Interest repayment loan and you have the option of choosing between different loan types, including Fixed Rate loans.
A construction loan helps to minimise your mortgage repayments until your new home is completed
In addition to your income and savings records, the documents you will need to apply for a construction loan are:
- A “fixed price” Building Contract with a registered builder.
- The Council approved plans for the proposed house.
- The house specifications documents.
- Proof of the Builder’s current building insurance.
- In the case of a House & Land package, the purchase contract for the block of land.
Finance is available up to 95% of the property value.
An Off-the-Plan Purchase is when you buy a property that is yet to be built but unlike Construction Loans you are not required to make progress payments to the builder during the construction phase.
Instead you will sign a contract for the full value of the property and make a single payment on completion.
Off-the-Plan purchases are common for multi-unit high rise constructions generally found in the capital cities. Given the long period of time between signing of the contract and settlement of the property (sometimes up to 2 years or longer), there is a risk that the value of the property may have dropped by the time you have to pay for it. You should always ensure that you have sufficient surplus funds to make up the difference in case of a deficiency in valuation.
You cannot apply for finance until the property is almost complete as loan approvals are only valid for 90 days.
To find out more, contact your local Lending Specialist or phone us on 1300 732 630.