As you build your home, you will need access to a variety of building materials. Building loans provide access to finance to enable you to afford renovations on your home.
As borrowers build their dream homes, funds are advanced in stages. So customers can go back to the merchant multiple times to buy the goods they need for each stage of building.
It’s important to keep in mind that lending institutions are looking to see that you are working with a reliable builder who will make sure that the building is completed on time as well as within budget.
When getting a building loan, you need to make sure that you keep a number of factors in mind.
What you should do:
Check if you qualify first. It’s important to make sure that you have a good credit record and that you will be able to afford the loan first.
Be clear about criteria that banks will look for when granting customers building loans. Familiarise yourself with the criteria when getting a building loan.
Be above 18 years old and have a clear credit record.
Make sure the finance will be used to build or alter a residential property. The loan should be used specifically for building.
Be able to afford to repay the loan. If you can’t afford the loan, rather wait until you can before you apply again.
The contractor you work with must be registered with the National Home Builders Registration Council (NHBRC).
Have the cash on hand to finance the loan shortfall.
Have an upfront deposit. Lenders are more likely to approve your application if you can provide a substantial deposit.
Have all documents ready, including your site plan, provisional drawings, etc
Don’t forget to make provision to pay the interest charged, to avoid a shortfall when the final pay-out of the loan is made.
Don’t forget to prepare all required documents well in advance.
Don’t use a builder who isn’t accredited.