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Most lenders handle construction loans in the same way as a normal loan. You decide the product that you want to completion, but not every lender will let you take a fixed rate at that point.
Redraw options, base variable and offset loans are generally suitable, but it’s best to check with your mortgage broker first.
Growing through New Construction Loans
The significant difference between new construction loans and normal loans is that you only pay interest payments on the loan amount drawn down as you progress through the construction process.
If you pay cash for your land and then arrange a construction contract with your builder, they will ask for a progress payment upon the completion of a specific stage of the project.
This invoice is sent to the lender and they will pay the builder. The lender will then send you an interest payment request.
Various construction loans include house and land packages where the land loan is drawn and progress payments are made on construction.
Some of these packages only require full payment upon completion, which can save thousands, as the builder incurs the interest cost on the construction.
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