Generally, getting a construction loan is harder than getting a regular mortgage. The one main drawback with this type of loan is that you have to pay it back when your home is constructed, no matter what is owed on the loan. When you apply for a construction loan, try applying for a construction-to-permanent loan. If you are approved for this loan, you will only have to pay interest while the home is being built and then it will transfer over to a regular mortgage when it is finished.
If you are confused as to what type of loan you should get, you can talk to a mortgage broker Sydney. They can help you through the process of finding the right loan and how to apply. They will help you understand the two types of loans, construction, and construction-to-permanent. Once you have decided which loan to go for, it is time to submit an application. With the construction-to-permanent loan, you will only have to apply one time. With a construction loan, you will have to apply twice.
If you do the construction-to-permanent loan, you can save thousands of dollars in closing costs but the interest rate may be higher. With this type of loan, you may have fewer options. With a construction loan, when applying for a permanent loan, or mortgage, you may find interest rates that are not as high with a different lender.
Each lender will have its requirements for applying for a loan. Most will require the following:
- You will need to have a qualified builder that is a licensed general contractor. They will need a good reputation for building houses. This will show the lender that approving the loan will be a good risk.
- You will also need to provide information on the materials you will be using and the floor plans so the lender can see the specifications of the new home.
- Have a down payment of 20-25$
- You will also have to have your specifications appraised. When this is done, the appraiser will find properties that are comparable to yours to make sure that it is worth the loan.
With a mortgage broker Sydney, they can do the shopping around for you to find the lender that can offer you the best loan. Sometimes they can get a construction loan at wholesale rates and get you a good deal. They can also explain all your options to you. They can also make sure that they lend are experienced in construction loans.
Before applying, you should also check your credit history to make sure that everything on it is correct. You want to make sure that there are no accounts on there that do not belong to you, or any inaccurate accounts such as the wrong balance listed or should have fallen off your report.
When applying for your construction, make sure that you have all the documents you need. This can include your W2’s, employment history, credit report, builder information, floor plans, and more. The lender will tell you just what they need