Building a Home

Finance Your New Home With An AFM Construction Loan

An AFM construction loan is ideal if you’re planning to build a new property, or purchase land with the intention of building. Construction loans are structured differently to home loans for existing properties where the entire loan is drawn down at settlement. With an AFM construction loan, progress payments are made at various times throughout the construction process. Payments are usually made at the deposit, base, frame, lock up, fit-out and final completion stages. This progressive draw down structure means you only pay interest on the portion of the loan that has been paid out.

Construction Loan Process

Building or renovating your home doesn’t need to be a complicated process, we explain each step in more detail.

1   Pre-Approval

It’s a good idea to apply for conditional or pre-approval when you require a construction loan. This way your lender can check your financial situation and make a formal assessment on whether you can afford to make repayments on the amount you’d like to borrow.

To apply for conditional approval, you will need to supply the following supporting documentation:

  • Identification documents such as your birth certificate, passport, driver’s licence or citizenship certificate
  • Proof of income like payslips, tax assessment & evidence of any other income
  • Evidence of assets & liabilities such as motor vehicle registration or credit card statements
  • Copies of your bank statements
2   Choose Your Home
Choose your builder, home design and block of land (if purchasing a home and land package). Sign your written offer to purchase, conditional on approval of your construction loan, and negotiate your finance and inspection clauses—usually allow 14-21 days. The building contract must be a signed, fixed-price building contract, inclusive of GST and include a time frame for completion. It is also required to be in line with HIA, with approved home-owners’ warranty or state equivalent.
3   Inspections
All construction loans require an initial valuation (on the basis as is and on completion). Progress inspection reports may also be required at base, lock up and final stages.
4   Loan Repayments
Construction loan repayments can be made on an interest-only or principal and interest basis, and will be progress payment based. Interest is calculated daily on the closing balance and charged monthly in arrears.
At AFM, construction loans are one of our specialties. Whether you’re looking to invest or build a new home to live in, we have a construction loan to suit.

Not sure where to start or want to know which properties are in your budget?
Try our borrowing power calculator to see how much you are eligible to borrow.

Key Construction Loan Features

100 per cent offset account

100% Offset Account

Save on interest by attaching a 100% offset account to your home loan.

borrow up to 95 percent of property purchase price

Borrow Up To 95%

Depending on how much deposit you have saved, you can borrow up to 95% of the property value.

Flexible mortgage repayments

Flexible Loan Repayments

Have the option to pay the principal and interest during and after construction, or you can take advantage of interest only repayments while construction is in progress (up to a maximum of 12 months).

mortgage for renovations or construction

Renovate Or Build

Our construction loans are not just for building a new home, you can apply for a construction loan to assist with the completion of major home renovations as well.

First home owners grant

First Home Owners Grant

If you are a first home buyer, we will release the First Home Owners Grant once your land has settled giving you more breathing space when it comes to the funds you’ll need to complete the rest of the construction.

Construction Loan Guide

All you need to know about obtaining finance when building a new home.

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