Construction Loan Specialists
Home Construction Loans With Tora Finance
Whether you’re building a new home or renovating an existing structure, having an experienced mortgage broker by your side will ensure a smooth construction process. With over 50 banks and lenders on our books, Tora Finance can negotiate a highly competitive construction loan that works for you. Our team understands the uncertainties and pressure that come with a new build or major renovations. We are here to support you through this process, ensuring you have the best value loan on your fixed-price building contract.
What Is A Construction Loan?
If you’re constructing a new home or making renovations to your existing house, a construction loan may be a viable option for you. Typically, a construction loan covers the cost of both the land you are purchasing and the house you plan to build. By bundling the cost of the land and the building process together, you avoid the risk of owning a property that is worth less than the loan size.
How Does A Construction Loan Work?
With a construction loan, funds are released sequentially throughout your build, rather than being paid out all at once. The advantage here is that you only pay interest on the loan amounts that have already been released. This makes a construction loan more cost-effective than standard home loans, as the interest on a lump sum will always be greater, even after the final progress payment.
A construction loan will always require detailed planning and thorough project management. With the right financial support, this process can be highly rewarding (as well as an astute investment). Tora Finance is proud to offer brokerage on residential construction loans across the Brisbane region. Our mission is to ensure that you are confident and informed about the entire financial process, settling on a home loan that helps make your dream house a reality.
How Do Progress Payments Work
Your Construction Home Loan Journey
Building projects are notorious for delays and, if you’re unlucky, this can blow out the cost of your project exponentially. Utilising progress payments instead of a lump sum loan can provide the flexibility to keep moving forward over the construction period, regardless of the twists and turns along the way. Below we outline each of the stages after you get a construction loan:
Stage One
When acquiring a construction loan, the first step is to understand your current budget. This will guide your search for the right property and ensure you engage with an affordable building team. After choosing the land, you can begin negotiating with one or more building contractors to find a quote that works best for you.
Before seeking finance, you often must have the following documentation at hand:
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Executed land contract (dated and signed by all parties involved)
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A draft or signed fixed-price contract with a licensed builder
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Specifications and build plans
With this documentation, Tora Finance can begin negotiating with lenders to find the best construction loan for you. Our team listens to all your concerns, finding a competitive interest rate. We ensure you are well-informed about the lending criteria and repayment timeline before moving to the next stage.
Stage Two
When you have chosen your construction home loan, Tora Finance can finalise and submit the application. You may need to resolve any outstanding building plans and other specifics with your contractor during this stage, which could require you to pay a small preliminary deposit.
Once the loan is approved, the bank will prepare for your land settlement. Once the land is settled; the vendor or developer will be paid in full for purchase of the land with the land ownership being transferred into your name.
Before construction commences, your lender may also need to witness the relevant council planning approvals and builders’ insurance documents. Tora Finance can help with this step, liaising directly with the lender and builder on your behalf.
Stage Three
It’s time to start building. As the project progresses, your builder should supply you with a series of invoices for each stage of construction. As the homeowner, you must sign these invoices and pass them on to your mortgage brokers. Tora Finance can transfer these documents to the lender, who will process your payment.
Typically, payments are released over four or five stages across the construction process. These stages are usually:
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Laying the foundations
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Erecting the framework
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Window and door installation
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Installing internal fittings and fixtures
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Finishing touches
When your home is complete, and the builders have left the construction site, your construction loan balance will revert to a standard home loan. Tora Finance is by your side the whole way and will guide you through this transitional process.
Need Advice From An Expert Mortgage Broker?
If you are looking for trusted home loan experts or want to learn more about our flexible services, follow the links below:
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