Construction Loans

As mortgage brokers, we deal with plenty of people looking to get help with construction finance. Let us explain the different stages of construction that you’ll encounter when securing a construction loan. Understanding these stages will help you navigate the loan process more effectively.

1. Deposit: At the beginning of the construction loan process, you’ll be required to pay a deposit to secure the loan. This deposit is typically a percentage of the total loan amount and serves as a commitment from you to proceed with the construction project.
2. Base Stage: The base stage, also known as the foundation stage, is where the construction of your property begins. During this stage, the site is prepared, and the foundation is laid. This includes excavation, pouring concrete, and constructing the base structure of your home.
3. Frame Stage: Once the foundation is complete, the frame stage commences. This is when the walls, floors, and roof of your property are constructed. It’s an exciting phase as you’ll start to see the shape and structure of your home taking form.
4. Lock Up Stage: The lock-up stage marks an important milestone in the construction process. During this stage, the property is secured with external doors, windows, and roofing. This ensures that the property is weatherproof and secure, allowing internal work to begin.
5. Fixing Stage: In the fixing stage, the focus shifts to internal work. This includes installing plumbing, electrical wiring, insulation, plastering, and other fixtures and fittings. At this stage, the property starts to resemble a completed home, with the installation of doors, cabinetry, and flooring.
6. Practical Completion: The practical completion stage signifies the end of the construction journey. It’s when the builder confirms that the construction work is finished and the property is ready for occupancy. This stage involves a final inspection to ensure that the property meets all relevant building codes and standards.

Throughout these stages, your construction loan will be disbursed in increments, known as “draw downs,” to cover the costs associated with each stage of construction. These draw downs are typically released upon completion of each stage, subject to inspections and documentation provided by your builder.

As your brokers, we will work closely with you and your lender to ensure a smooth loan disbursement process to support your dream build. We’ll liaise with the lender to coordinate the release of funds at each stage, ensuring that you have the necessary financing to complete your construction project.

By understanding these stages and having a clear timeline, you’ll be better equipped to manage your construction loan and make informed decisions throughout the process. Rest assured, we’ll be here to guide you every step of the way and ensure that your construction loan journey is as seamless and stress-free as possible. Contact us today.