A building or construction loan provides funding for building property or extensive renovations in a way that means you have the lowest possible repayments during the construction phase.
Building or construction loans generally operate as an interest-only facility with a variable interest rate during the construction period, before reverting to the standard home loan package you have negotiated with your lender. During the building or construction period, you only pay interest on the part of the home loan that has been drawn down, or paid out. Building or construction loans may vary slightly state to state, ask your mortgage broker for more information.
If you are looking at a completed house and land package, you will generally use a regular residential home loan and not a construction loan to finance your purchase.
If you are considering purchase of an investment property, speak to the experts at www.thepropertybox.com.au