Renovations & Extensions
If you’re building a new home or planning major renovations to your existing home, a construction loan is generally the most appropriate funding option.
The difference between a ‘construction loan’ and a ‘standard home loan’ is that instead of a lump sum payment at settlement, the loan is usually drawn down in stages. Payments (or draw downs) coincide with the initial purchase of the land (where applicable) and at the completion of a number of key construction stages.
This type of loan is ideal for building, as you only pay interest on the amount you draw down. For instance, if you have borrowed $450,000 for a house and land package, but have only drawn down $200,000 to pay for the land, you only initially pay interest on the $200,000 until each construction stage and drawdown is complete.
Before building starts, you will need to pay a deposit to your builder (as well as paying a deposit for the land if applicable). As work progresses you will need to make payments to the builder. Your ‘contstuction loan’ Lender will make these progress payments as each stage of construction is completed and verified by the Valuer. Your Navigator Home Loans Mortgage Advisor can help manage the ‘progressive payments’ process. If you have some of your own funds to contribute to the construction project, these will normally be expended first before the Lender draws down funds from your approved loan.
The question of how to pay for home improvements is often the obstacle that delays or limits what you would like to achieve.
There are several ways to finance all or part of the project costs and Navigator will be happy to provide advice on the most suitable options to suit your needs.
Home Improvements Loan
More often, we are able to best accommodate your finance needs by restructuring your home loan with your current lender or an alternative if more advantageous to you. If you own your home outright, a new home loan can be arranged to achieve the best result. Using a home or home improvement loan to fund your project is preferable due to the considerably lower interest rates available.
We are often able to extend the loan term, if desired, to keep repayments at their current level. Very often, we are able to arrange a better loan at a lower interest rate than might apply to your current home loan.
Line of Credit / Home Equity
For customers who wish to undertake multiple home improvements over an extended period, we will often recommend approval for a larger sum to accomodate all your needs. This enables you to avoid lender fees and simply draw the funds in the future without needing to be re-approved by the Lender for each new project. Interest is charged only on your actual debt, not the approved credit limit.
60+ Year Old Customers / Reverse Mortgage
A Reverse Mortgage is a wonderful loan product designed only for customers aged 60+, who may not qualify for other forms of finance. A Reverse Mortgage enables to access some of the equity in your home. No regular payments are required on a Reverse Mortgage. The loan is repaid when the property is sold of when you leave the property permanently for any reason. A full explanation and details of this option will be provided for interested customers.
For smaller finance needs (less than $20,000) a personal loan might be the right solution.