Nothing is sweeter than seeing your dream house built from the ground up. Especially if you’d soon live in one of the most desirable Melbourne suburbs. According to Westbrookestate.com.au, Hoppers crossing real estate for sale beats purchasing an already completed house any day.
Other than the pocketful of benefits of having your home erected as you wish, getting just the piece of land lets you apply for a construction loan. Unlike other types of mortgages in the market, construction loans have unique advantages to help you save a fortune and give you some peace of mind.
Instead of receiving the lump sum of your borrowed money, you’d just get the amount necessary to finance a particular stage of the construction. This means the interest you have to repay wouldn’t be based on the overall cost of the loan, but rather just a portion of it.
This way, the interest rate is minimised over the lifetime of the mortgage. Until you need to physically draw down some funds for the next phase of the project, the unused money wouldn’t be a part of the equation yet.
While the construction of your property is underway, your repayments would be interest-only. Again, the interest is payable on the portion of the loan that has been physically drawn down. Not only monthly rate would be lower, it would also be cost-effective if you look at the bigger picture.
No Pressure from Builders
On construction loans, the lender would have to inspect and approved by the lender before the partial payment would be given to the builder. This ensures your building contractor is honest with what they are invoicing for and adheres to the agreed timeline.
This is a boon for homeowners like you, as you can pretty much guarantee your house would be completed with no fuss. The contractor couldn’t hold the project hostage if you wouldn’t pay in advance, and cause disruptions because any delay only prolongs the arrival of their paycheck.
Despite the fantastic advantages of construction loans, keep in mind that mortgages are not without drawbacks. Do your legwork to know its ins and outs to ensure you’re signing up for the right home loan.