Residential Construction Loan

The primary difference between new construction loans and traditional loans lies in the borrower’s responsibility to make interest payments on the specific portion of the loan that has been drawn down during each stage of the building process.

When it comes to construction loans, most lenders treat them similarly to standard loans. However, not all lenders offer the option of a fixed interest rate at the time of application.

There is a wide variety of construction loans available, including options such as home and land packages. In these packages, the land loan is typically obtained first, and construction instalments are paid as the project progresses.

By choosing a home and land package that requires complete payment only upon completion, you have the opportunity to save a significant amount of money. This is because the builder assumes the responsibility for paying the interest costs on the building during the construction phase.

If you purchase the land with cash and then enter into a building contract with your chosen builder, the builder will request progress payments once certain milestones of the project are reached. These invoices are sent to the lender, who is responsible for making the payments to the builder. Subsequently, the lender will issue a demand for payment of the accrued interest to you.

By opting for a package that requires full payment upon project completion, you can potentially save thousands of dollars, as the builder is responsible for covering the interest costs on the building during the construction period.

Let us assist you with an accurate construction financing estimate 

Contact Peony Finance today.