Owning a home is the ultimate realization of life’s best, and most opt to build theirs from scratch. While completely exciting, the idea of having a home constructed can be stressful. You’ll need to decide the number of bedrooms you wish to create, all the while ensuring that the pipes are strategically placed. There will also be decorating and raw materials to think about, including the most feared aspect of homeownership—financing.
As a homeowner, you’ll do well to work with a lender that simplifies the entire financing process, so that you can focus on what matters—building your dream home. Thankfully, a construction loan has been designed to help you do just that.
A construction loan allows borrowers to loan a certain amount of money, dedicated to paying for the cost of the building process. It essentially allows you to draw the loan in various stages of the construction process, making it the perfect flexible option.
To help you get started on constructing your dream home, here’s a quick guide on what to expect:
1 – Make sure to assess your finances
You may be earning the average income in the country, but having thousands of dollars in cash is almost impossible. Having a home built requires you to hand cash on hand, which includes the home’s finishing touches and raw materials. You’ll also need to take other factors into account, making the construction process a steep amount of money. Thankfully, the construction loan exists to finance your needs.
Keep in mind that lenders are almost always stringent when it comes to construction loans, especially considering that they’re financing a home that does not exist—yet. For this reason, expect to be subjected to strict qualification requirements. You need to assess your finances beforehand, along with your credit score. You’ll need top-notch scores and carefully formed good purchasing habits!
2 – Know how to qualify for a construction loan
Although having a spotless credit score is necessary, you’ll need to consider numerous other factors to ensure that your construction loan application goes smoothly. Make sure to prepare all the necessary documents in advance, which is likely the same as traditional mortgage requirements. Expect to be asked for a comprehensive list of all the construction details, down to the last materials you wish to use. To help you prepare without a hitch, consider this checklist:
- All your current financial statements, including income, assets, and liabilities
- A signed purchase agreement or a construction contract with your chosen developer
- Plans, specifications, and budget details of the construction
- A timetable of the construction project, which should include the start and finish dates
3 – Borrow from a licensed broker
Construction loans come with specifications and standards, so it’s crucial to work with a licensed brokerage that knows what they’re doing. It also pays to work with a finance officer you can rely on, as they will help walk you through the entire process—including other feasible options.
Reputable brokers have multiple lenders and hundreds of different products for you to choose from depending on what works best for your situation. Their guidance will be based on your current financial standing, along with the details of your dream home.
Work with the Best Financers in Perth
Homeownership is a cornerstone of life, and having one to call your own is a milestone worth celebrating. Building your dream home can make the process even more rewarding, even if it requires more work and effort. The process will need more time and planning, but preparation is always key to success!
More importantly, working with the right people ensures that you’re covered every step of the way. For the best construction loan in Perth, WA, FinanceCorp has you covered. All of the Finance Managers at FinanceCorp are fully qualified, trained and experienced mortgage professionals who live and breathe finance. Enquire now!