What Are Home Building Loans, and How Can They Benefit You?

If you are looking to build your first home soon, you might be wondering about the different options available when it comes to financing this. One solution to consider is home building loans. 

However, if you are unsure of what these are and whether it is a good fit for your needs, don’t worry, here at Simpler, we can help. In this blog, we will explore what home building loans are and how they can benefit you.

Let’s dive right into it. 

What Are Home Building Loans?

Building a new home from scratch can be costly, which is why a home building loan might be required. This is a type of construction or development loan that is used to cover the cost of building a new home. These are short-term loans, with a floating (changes in line with the market) interest rate while the property is under construction.

There are different types of loans depending on the details of the construction project:

• Turn key - the home will be fully finished; usually offered by construction companies
• Build-only - land bought separately and hired builders for construction
• Partial-build - more than one person or company are involved in the construction 
• Relocatable and pre-built - refers to relocatable and pre-built homes 

Benefits of Home Building Loans

Home building loans offers numerous benefits, such as:

• Easy and simple process - the mortgage approval process is simple and once approved, you can expect regular repayments that should be easy to follow and comply with
• Small deposit - most banks will typically lend up to 90% of the construction cost, meaning that a 10% deposit is usually required
• Mortgage cashback - it is possible to receive mortgage cashback once the build is completed and the balance switches to fixed-term (speak with your mortgage broker for more information)

If you are looking into home building loans as someone who is interested in building a new home, and need expert guidance and advice on mortgage approval, Simpler has got you covered. As experts in mortgages and loans, you can count on us to help you better understand the buying process, including what home building loans are. Schedule an appointment with us today to begin working with our experts to continue your new build journey!