Construction, Building & Renovation Loans

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Construction, Building & Renovation Loans

Create your dream property with a construction, building & renovation loan

Before you knock down any walls, you’ll need to work out how much you can afford to borrow, as well as the most cost effective way of funding your renovation or new build.

One option is to take out a construction loan which is also known as a building loan, renovation loan or an owner builder loan.

Because construction loans differ from other types of home loans in several key ways, let’s take a closer look at how a construction loan works.

How is a construction loan different from other types of home loans?

Loan is drawn down in instalments – Unlike other home loans where you receive a single lump sum when your loan is first approved, with a construction loan you draw down your loan in instalments, allowing you to make progress payments to your builder at key stages of the building process.

Interest is only paid on funds drawn down – During the construction process you only make interest repayments on the portion of the loan that you have already drawn down, so your repayments are smaller at the start of your loan, gradually increasing as your construction project approaches completion.

More restrictive lending requirements – To be eligible for a construction loan in Australia, you’ll need a copy of a fixed price building contract/tender, detailed council approved building plans, a budget and timeline for completing the work, a good credit score, a stable income and a deposit of at least 20%.

Is a construction, building & renovation loan always the best way to finance your renovation or new build?

The obvious advantage of a construction loan is that you only pay interest on the money you use, however, due to the tighter lending restrictions that apply to this type of loan, it can be harder to obtain.

So you might want to also consider one of these other methods of financing your construction project.

Home loan top up – unlock any existing equity you might have if you have paid off a chunk of your home loan or your property has gone up in value.

personal loan – due to higher interest rates this is an option for smaller loans, however it is easier to obtain as does not have the same lending restrictions as a construction loan.

Refinance your home loan – takes time and fees involved, however another lender may give you a better interest rate as well as a larger loan.

Redraw facility – allows you to access advance payments you have made to your home loan repayments so no need to refinance with another lender.

Having trouble obtaining a construction loan or deciding on the best option for your build? Mates Rates is here to help!

We’ll find the best construction loan for you and give you Cash-Back too

If you’re thinking of applying for a construction loan or need help on finding the best loan to build your dream property, Mates Rates Mortgage Brokers can save you time and hassle at every stage of the application process.

Our expert brokers understand the extra paperwork involved in this type of loan and will ensure you have all the necessary documents the lenders need so there are no unnecessary delays.

We compare the different lenders and the different types of loans and then we’ll reward you with cash back for the entire life of your investment loan. We don’t charge you a fee for our mortgage broking services and you’ll get the same interest rate as you’d receive directly from the lender.

Find out more about how our application process works or take a look at our cash back calculator to see how much you can save with a Mates Rates Mortgage Brokers cash back investment loan.

What is a Mates Rates Mortgage Brokers Cash-Back loan?

All banks and home loan lenders pay mortgage brokers both an upfront commission as well as ongoing monthly trail commissions every single month for the life of your loan.

With a Mates Rates Mortgage Brokers cash back construction loan, our expert Mates Rates Mortgage Brokers will organise your construction loan for you, taking away the time, stress and hassle it takes to find the best construction loan for you…

…AND we pay all of the trail commissions to you as cash back, each and every month for the life of your loan!

Our services are free to you and you’ll get the same interest rate as you’d receive directly from the lender. The only difference is, we pay you cash back every single month!

Why use a Mates Rates Cash-Back Mortgage?

Cash-Back Payment

Save thousands of dollars over the life of your home loan with our monthly cash back payments.

Free Service

We don’t charge you for our services – our “fee” is taken from the upfront commission we receive from the lender, instead of from your pocket.

Best Deal For You

Our Lender Commission Leveller ensures no home loan lender is left out of consideration because we are always paid the same amount, regardless of the lender’s commission percentage.

Best Home Loan Rates

We offer the same great rates and deals as you would receive when going direct to the lenders.

Expert Advice

Our expert brokers save you time and money as they guide you and help you through the entire loan process.

Wide Choice Of Lenders

We compare thousands of loans and rates from more than 45 banks and other home loan lenders.

At Mates Rates Mortgage Brokers we are proudly the original and the best Cash-Back mortgage broker, having invented Cash-Back home loans in 2005. So far, we’ve paid more than $10 million in Cash-Back to people just like you.

To begin your construction loan application process give us a call on 1300 558 161, email to info@matesratesmortgages.com.au or enquire online.

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Frequently Asked Questions

Yes, you will usually need at least a 20% deposit and a loan-to-value ratio (LVR) below 80%.

As long as you have enough equity to meet the deposit requirements of the construction loan – which can be 20% or even more – you can use this equity to obtain a construction loan.

It will depend on the bank or the lender and your financial circumstances.

Some banks and other lenders will offer Low Doc Construction Loans and it will depend on your financial circumstances.

Depending on the lender, you must commence drawing your construction loan within 12 months from the Disclosure Date – this is the date that the construction contract was issued to you as the borrower. Construction must be completed within 24 months of the Disclosure Date.

Unfortunately, changes to plans or contracts can require your lender to re-approve your loan, so it’s best to avoid these if you can. It’s a good idea to allow a building buffer when looking at how much to borrow so you can cover unexpected costs without having to refinance.

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