Navigating the path to your dream home can feel overwhelming, but with the right construction loan, the process becomes a lot simpler.
At Loan Monster, we work with you every step of the way to find the best loan solution tailored to your project.
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Using Construction Loans to
Finance Home Renovations
Construction loans aren’t just for new builds—they can also be an excellent option for funding major home renovations. These loans are designed to be flexible, so you can access the funds you need in stages as your renovation project progresses.
This means you only pay interest on the money that’s been drawn down, reducing your overall costs during the renovation process.
Whether you’re adding a new room, updating your kitchen, or making structural changes, a construction loan can give you the financial freedom to transform your home.
How Construction Loans Differ
From Standard Home Loans
A key difference between a standard home loan and a construction loan is how the funds are accessed.
With a standard home loan, the full amount is borrowed upfront and used to pay for the property in a lump sum. In contrast, construction loans are typically drawn down in stages, aligned with the progress of the construction.
During the building phase, most construction loans are interest-only, which helps keep repayments lower while the work is being completed. Once your property is finished, the loan will often convert to a standard home loan or a repayment plan of your choice.
Construction Loans vs
House and Land Packages
A house and land package combines the purchase of a block of land with the construction of a home.
In most cases, a construction loan can be used to finance both the land and the build, but there’s a key difference. When you purchase the land, the loan will operate similarly to a standard home loan.
The construction aspect is then funded in stages, meaning your loan will be drawn down as the build progresses, ensuring you only pay for what’s been completed.
Get in Touch
With Us Today
With Us Today
If you’re interested in learning more about the construction loan options available to you – just get in touch with one of our friendly brokers in Fremantle to start the process.
Frequently Asked Questions
We’ve compiled some of our most frequently asked questions about construction loans and answered them here for you.
How do construction loans work?
Construction loans are provided in stages, typically corresponding to key milestones of the building process. You only pay interest on the funds drawn down at each stage, which helps manage your budget more efficiently during the construction phase.
Can I use a construction loan for home renovations?
Yes! Construction loans can be used for significant renovations where staged payments are necessary. These are often used for large-scale projects that require more flexibility in funding.
What happens to my construction loan when the building is complete?
Once your construction is finished, the loan will usually revert to a standard principal-and-interest loan, similar to a traditional home loan. You’ll start repaying both the interest and principal amount from this point onwards.
How is the value of my home assessed during construction?
Lenders will usually conduct valuations at various stages of the build to ensure that the work completed matches the funds drawn down. This protects both you and the lender, ensuring that the funds are used appropriately.
Can I make changes to my construction loan during the building process?
Yes, many lenders allow some flexibility if changes are needed during the construction phase. However, it’s important to discuss any variations with your lender to understand how they might impact your loan and building schedule.
Let Loan Monster Take Care of
Your Construction Loan
Let us take the worry out of financing your construction projects. Get in touch to make an appointment with our team in Fremantle or fill out our enquiry form and get in touch with one of our brokers today.
