Licensed Builder Construction Loan
A licensed builder is generally the most preferred option to build a house. This involves you engaging a builder whereby you get issued with a fixed price builder’s tender or contract. In short, this is a full quote of what it will cost to build the house. When this and the council approvals have been received, the lender issues a letter of commencement to the builder and he begins his work.
The fixed price tender is quoted and broken up into 5 progress payments. This includes a breakdown of the costs to build the house. During the construction, the lender will pay the builder in progress payments as work is completed. For example, when the slab is poured, and that is a portion of the tender, the lender will pay for that portion of the work completed, when the frame of the house is put up, the lender will pay for this part of the tender and so on. This process continues until the builder completes his tender works.
For the purpose of the construction loan, a lender will also request from the builder a copy of his public liability and builder’s warranty.
There are many different types of loan products available with a construction loan. These include:
- Standard variable home loan
- Investment home loan
- Honeymoon loan
- All in one
- No doc
- Basic variable
- Professional package
- Low doc loan
- Fixed rate loan
- 100% offset
If I was a licensed builder, can I build my own home?
If you were employed as a builder by profession, you can apply to build your own home as a licensed owner builder up to 75% LVR. This can be done using 1-2 lenders in Australia in 2015.
At Mortgage Providers, we know where to find the cheapest and most flexible construction loan lenders. We can find this for you when you obtain an independent builder, or even if you are acting as an owner builder. Our staff have published journals and articles on these subjects. Talk to us for more information.