What is a construction home loan?
If you’re building a new home or planning major renovations to your existing home, a construction loan is generally the most appropriate funding option.
Construction loans allow you to borrow funds for the project with small monthly repayments as the loan starts as interest only.
Using estimates and tenders from builders, along with council approvals, your lender will calculate the final building costs and agree on a loan amount. You draw the money as and when you need it, usually as each major stage of the construction is completed. The loan is interest only during the construction phase, and you only pay interest on the amount of funds you have drawn, rather than the whole loan amount. You can also make early repayments should you wish to. A construction loan can offer many benefits to borrowers wishing to design and build their own home, as it offers an affordable way of borrowing the funds necessary for the task. Once the construction is complete, the loan reverts to a principle and interest loan.
However, because you pay interest only you are not paying the principle part of the loan, therefore once construction is complete, you will find that you have not paid much of the loan total. And, the loan is variable rate therefore if interest rates go up, so will your loan repayments.
First Home Buyer Grant
The boost to the First Home Owners Grant is being phased out and as of 31 December 31 will no longer be available. The original first home owners grant of $7,000 is still available to eligible first home buyers.
The scheme is provided by the Federal Government and is aimed at helping first home buyers onto the property ladder. The grant was increased as part of the government's stimulus package in 2008 but is now winding back to the original $7,000.
The NSW First Home Buyers Supplement will be available until 30 June 2010 and the $7,000 First Home Owner Grant and the First Home Plus schemes will continue to be available after 30 June 2010.
For more information on what you can claim as a first home buyer, contact your nearest mortgage broker. /FONT>
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To find out if you are eligible for this loan visit http://www.firsthome.gov.au/
If you are looking for a construction loan with a great rate and benefits, call  .
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