Building a home is a big investment, and it’s important to get the right finances for the job. Getting the money to build a house can seem hard, but if you know what your choices are and what you need to do, it can be easier. In this blog, we’ll talk about the different kinds of loans for building, what lenders need to approve a loan, and how to choose the best lender for your needs.
A construction loan is a popular option to pay for the cost of building a home. Construction loans are made to pay for building a new home or making a big change to an old one. These loans are different from traditional mortgages because the time it takes to pay them back is usually faster and the interest rate is higher. The loan amount is given to the borrower in “draws” at certain points of the building process. Some steps of the job, like pouring the foundation or putting up the roof, may be tied to these draws.
You will usually need a detailed building plan and budget, proof of your income and assets, and a deposit of up to 20% of the total cost of the project to get a construction loan. The lender will also look at your credit history and other aspects of your finances to decide if you can get the loan.
When choosing a lender for your project to build a home, it’s important to look at deals from more than one place. There are a lot of differences between lenders when it comes to interest rates, fees, and payment plans, so it’s important to look around and find the best fit for your needs. Some lenders may offer loans with more open terms or loans that are made especially for home builders.
To make sure the job stays on budget and on schedule, you must work closely with your builder and lender to manage the flow of money. Before releasing the next draw, your lender may ask for inspections or other proof that each stage of the job is done. It’s also important to have a backup plan in case there are extra costs that come up during the building process.
A turnkey or house and land deal is another way to pay for a new home. In this kind of deal, the builder gives you a piece of land and then builds a house on it based on a plan. This choice might be easier than a construction loan because the builder takes care of most of the details, and you might be able to get financing through the builder or a specialised lender.
When thinking about a turnkey or house-and-land deal, it’s important to learn as much as you can about the builder and the property. Some builders may offer good financial plans, but they may cut corners on the quality of the building or the materials they use. It’s also important to make sure the property is in a good area and has all the services and features that are needed.
In the end, getting the money to build a house takes planning and research. Construction loans and turnkey packages are two popular ways to pay for a new home. Both have their pros and cons. When choosing a lender, it’s important to compare deals and look closely at the loan’s terms and conditions. You can make sure your home building project stays on budget and on schedule by working closely with your builder and lender.
When thinking about a construction loan, it’s important to talk to someone who knows a lot about it. We at Stonewood Homes have teamed up with NewBuild, the experts in home construction lending, to help you get a loan for your new home.
NewBuild has a variety of options for construction loans that are made to fit your wants and budget. They have low interest rates and different ways to pay back the loan, so you can pick the one that works best for you. Also, it’s easy to get a loan from them, and the acceptance process is quick.
With the knowledge of NewBuild and the experience of Stonewood Homes, you can be sure that your new home will be built to the highest standards. Contact us today to find out more about our construction loan choices and to get started on your application. We encourage you to use our online lending calculator to explore just how easy it may be to start the process of building your new dream home.