Construction Home Loans

Looking for a construction loan?

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Build your dream home with Zenith Financial

Whether you’re embarking on a major renovation or starting your homeownership journey from the ground up, Zenith Financial is here to support you every step of the way.

With deep expertise and over 1,000 approved loans, we understand the unique demands of construction financing. Our team is committed to making your loan application process smooth and straightforward, so you can focus on bringing your vision to life.

What is a construction home loan?

Construction home loans are loans designed for residential construction projects. Unlike other home loans, your bank will lend you the money to pay for building a new home from the ground up.

This also applies to home expansion or if you want to renovate your existing home.

Another key difference is that the property being built will become the security for a construction home loan—one that’s repaid throughout the loan term and as the project progresses.

Let us handle the details of your construction home loan application. At Zenith Financial, we’ll explore your lending options and guide you to the best rates and discounts tailored to your financial goals.

How do construction home loans work?

Construction-related home loans have loan-to-value ratios (LVRs) of up to 95%. The maximum LVR will vary between lenders (bank and non-bank), so it’s crucial to discuss your lending goals and options with our mortgage brokers.

You may also need a separate land loan to purchase the property where the project will be constructed.

Banks and non-bank lenders who cater to construction home loans have their own appraisers who will estimate the project’s potential value upon construction completion.

After the appraisal, they will arrive at a preferable construction home loan amount, affected by land price, building costs, and upon-completion value.

Depending on your lender and the future use of your property, they may even consider future rental income when assessing your home loan. Nonetheless, once your loan application is approved, you will receive a loan offer from the bank to sign and submit.

Learn more about construction home loans and get started with your dream project with Zenith Financial. Our team of mortgage brokers will facilitate your loan application and help you get the best rates and discounts available.

Contact us at 1300 312 712 or fill out our assessment form, and we’ll get back to you with professional, tailored advice about your situation.

Our Lenders

Construction Home Loan FAQs

Every bank and non-bank lender has varying criteria for construction home loans. Some have very high standards but offer significant discounts and lower rates, while others are more lenient and offer standard rates and loan facilities.

That said, it’s recommended to speak with a mortgage broker who specialises in construction home loans so you know where you stand and which lenders will suit you best. In most cases, you’ll have to prepare the required documents, such as:

Tax returns
Bank statements
Income verification
Fixed price building contract
Council approved plans
Specifications and inclusions of the build
And other financial information

Lenders also want to confirm and validate your financial security to ensure you can make the interest repayments throughout the construction period and repay the mortgage. An excellent job history and a steady line of income are key to reassuring your lender about your financial capacity.

You may also need to submit construction plans, such as architectural drawings and engineering plans. That includes a well-documented budget and project estimate that indicates all construction-related costs, from supplies to labour and permits.

In other words, the more thorough and detailed your plans, the better.

Contact us at 1300 312 712 or fill out our assessment form to learn what lenders look for in construction home loans and how you can get approved.

It’s best to overprepare for construction home loans. By preparing all necessary documents and construction plans, you can improve your chances of getting approved and experience a smoother loan application process.

Keeping open communication with your lender also helps, especially during the application and construction period.

Application

When applying for a construction home loan, you and the lender must understand the project’s scope, costs, and the loan term.

Like other home loans, your income and savings will be evaluated to determine your borrowing power. But for a construction home loan, you will also need to submit council-approved building plans, a fixed-price building contract, and a copy of the builder’s licence.

Mortgage Repayments

Depending on the type of loan and your lender, the terms and conditions, as well as repayment structure, in a construction home loan may differ from those in typical home loans.

Contact us today, and we’ll discuss the loan repayment procedure for your chosen lender and facilitate your construction home loan application.

Home Completion

Once your application has been approved, you will receive access to your construction loan funds. Your building contract should indicate the payment schedule for various construction phases, which are typically:

Preparation
Slab (base flooring)
Frame
Lock-up
Fit-out
Completion

Moving in

Once you receive the final payment, the loan will be transferred to the standard house loan you signed up once the lender has inspected the property and performed a final inspection check.

That said, make sure all construction work has been completed and inspected before moving in. If there is any unfinished work or remaining tasks, check with your builder or contractor to resolve them immediately.

For construction home loans in Australia, you may be required a deposit of at least 5% to 10% of the land and construction costs at the expense of paying Lenders’ Mortgage Insurance (LMI).

To avoid premium fees, we recommend securing a minimum 20% deposit. Note that this figure may vary depending on your financial circumstances, the lender, and whether you’re buying the land separately, already owning the land, or financing the full construction process.

In short, the larger your deposit, the better your chances of getting favourable loan terms become.

Extending the construction loan to cover extra expenses that arise later in the construction or restoration project is possible. However, not extending your loan is subject to several conditions possibly indicated in your contract and will require the lender’s approval.

Our mortgage brokers will discuss this your project with your bank and may convince them to increase the loan amount, given that you have submitted a formal written estimate. Whether this can be achieved will depend mainly on the type of construction project and your chosen lender.

Where experience counts

Having encountered thousands of different scenarios, our team is well equipped to find you suitable solutions. Having the right mortgage broker by your side is essential to ensure you are getting the absolute best deal for your unique situation.

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Your success is our success

We understand everyone’s circumstances are different and we take the time to understand you and your goals. We value forming lifelong relationships with all our clients and we are fully committed to adding value every step of the way.

We know that mortgages can sometimes be complex and hard to understand. We focus on simplifying the process for you and we treat your loan as if it were our very own. Let us do what we do best so there’s one less thing for you to worry about.