If you are building your own investment property, a construction loan may best suit your needs.
You can use a construction loan to purchase land and then access the funds as needed to meet the building costs. Or, if you already have a block of land, a construction loan will finance the construction costs of a new dwelling on that land or even major renovations to an existing property.
A fixed price building contract from a registered builder is required, along with the usual necessary documents, when applying for a construction loan. These loans are usually interest only for the period of building and then become principal and interest once building is completed.
- Competitive variable interest rates
- Facility to draw money when necessary whilst building
- Interest only payments during the building period
- Additional payments can be made
- Requires a fixed price building contract leaving little room for change whilst building
- Some lenders charge a fee for every time you draw money whilst building
- Given it is a variable loan; loan repayments will increase if interest rates go up