We hope you find these articles helpful in building your home.

What is a Construction Loan?

Construction loans help you purchase land, construct a residential property on land already held and/or complete the land purchase and construction. A construction loan allows you to make minimum repayments until construction or renovation is complete.

How is the construction period financed?

A variable loan is used to pay the builder in stages. During the construction period loan repayments are the interest on the amount of the loan drawn down. Draw down stages allow you to make payments in stages; this protects the borrower by ensuring the builder isn’t getting paid for work that has not yet been completed. How is the construction period controlled? Use a valuer to assess the land and planned construction. Progress payments are only made when the builder has reached certain objectives and met the required standards. HSBC controls the payments to the builder through invoices from the borrower.

Get the best loan during and after construction

A loan that provides construction as an option can often be better than a construction specific loan. Construction specific loans usually have a maximum construction period of 12 months. After this time the loan will revert back to either a standard variable or fixed rate loan.

The benefits of a loan with construction finance

This type of loan satisfies short term lending needs while offering the standard benefits for your long term finance requirements. A construction option on standard loans allows borrowers who don’t meet the criteria for standard lending to qualify for a loan that will meet their construction finance needs.

Construction loans for major renovations

Some construction loans allow for major renovations and structural changes. If you need council approval for renovations to your home, you will need a construction loan. If you’re planning to take out renovations in the future, find a loan that provides construction as an option.

This information has been prepared by HSBC. This is only a general guide - not a substitute for professional advice. Santo Correnti Homes Pty Ltd does not guarantee the accuracy, reliability, or completeness of any information on this page, and will not be liable for any loss or damage suffered as a result of anyone's relying on this information. We recommend you obtain advice from your own financial, taxation or legal advisor before entering into financial transactions.