Building your dream home as a pharmacy assistant requires careful planning and understanding of construction loan fees. These specialised loans differ significantly from traditional home loans, with unique fee structures that can impact your overall budget.
Understanding Construction Loan Basics
Construction loans provide funding in progressive drawdown instalments rather than a lump sum. You only charge interest on the amount drawn down at each stage, making them more cost-effective during the building process. This progressive payment schedule aligns with construction milestones, ensuring funds are available when needed for your registered builder and sub-contractors.
Pharmacist Home Loans can help you access Construction Loan options from banks and lenders across Australia, ensuring you find suitable terms for your project.
Key Construction Loan Fees
Progressive Drawing Fee
This fee applies each time funds are released during various stages of the project. Typically ranging from $300 to $800 per drawdown, this covers the lender's administration costs and property inspections. With multiple drawdowns throughout construction, these fees accumulate significantly.
Application and Establishment Fees
When applying for a loan, expect establishment fees between $600 and $2,000. Some lenders waive these fees during promotional periods, but they're standard across most construction loan products.
Valuation Fees
Construction loans require an 'as if complete' valuation, assessing your property's worth once finished. This specialised valuation costs between $400 and $800, depending on property size and location.
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Book a chat with a Finance & Mortgage Broker at Pharmacist Home Loans today.
Interest Rate Considerations
Construction loans typically carry higher interest rates than standard home loans during the building phase. However, you benefit from interest-only repayment options, paying only on funds already drawn down. Once construction completes, most loans convert to standard principal and interest repayments at competitive rates.
The loan amount approved depends on your income, deposit, and project costs. As a pharmacy assistant, demonstrating stable employment helps secure favourable terms.
Additional Costs to Consider
Council Plans and Permits
Before commencing building within a set period from the Disclosure Date, ensure all council plans and permits are approved. These costs vary by location and project complexity but are essential for loan approval.
Out of Contract Items
Many construction loans don't cover Out of Contract Items not included in your building contract. Budget separately for landscaping, driveways, and additional features.
Professional Fees
Engineers, plumbers, electricians, and other specialists may require upfront payments not covered by progressive payments. Factor these into your overall budget.
Types of Construction Projects Covered
Construction loans suit various projects including:
- New build on suitable land
- House & land packages
- Major home renovations
- Buying off the plan developments
- Projects requiring you to demolish existing property
Each project type has specific requirements regarding council restrictions, council regulations, and development applications.
Making Your Plan Work
Start by identifying your ideal location and price range. Consider council restrictions that might affect your build timeline and costs. Fixed price contracts provide certainty, making loan approval more straightforward than cost-plus arrangements.
A home improvement loan might suit smaller renovations, while full construction loans work for substantial projects. Your renovation Mortgage Broker can explain which option suits your circumstances.
Streamlined Application Process
Working with experienced mortgage brokers ensures a streamlined application process. They understand lender requirements and can match your needs with appropriate construction loan products. This professional guidance helps avoid delays and ensures you understand all fee structures upfront.
Construction loans require more documentation than standard loans, including building contracts, council approvals, and detailed project timelines. Professional assistance ensures nothing is overlooked.
Planning your construction project requires understanding all associated costs, not just the obvious ones. Construction loan fees form a significant part of your budget, and proper planning ensures no unexpected expenses derail your dream home project.
Call one of our team or book an appointment at a time that works for you to discuss your construction loan options and ensure you understand all fees involved in your building project.
