Building and renovating your own home can be either extremely rewarding or terribly stressful. Like any project, your home requires planning both architecturally and financially. Webdeal has access to numerous lenders offering extremely flexible home loan products at outstandingly low interest rates.

Home Construction Loan

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 the time of settlement, the loan is usually drawn down in stages.

Payments (or draw downs) coincide with the initial purchase of the land followed by a number of key construction stages. This results in your monthly repayments gradually increasing as construction progresses until the building is finished. Upon completion of your property, most Home Construction Loans revert to standard variable rate home loans. Alternatively at the end of the construction period yob may wish to refinance your home loan to another lender.

Home Construction loan is perfect if you wish to :

• build a home
• buy land to build your home or an investment property
• build on land you already own
• extensively renovate your existing home
• borrow at very competitive interest rates

If all you wish to carry out is a small renovation – for example upgrade your kitchen and bathroom, build a gazebo or do up the back yard, you may find that a line of credit or an equity loan that you already have may be sufficient to complete the works. At the end of the Home Renovation you can revalue the finished product and apply to gain access to further equity in your home.


Home Renovation Loan

A construction loan is most suitable for extensive home renovation projects or substantial rebuilding. If you are looking to update your bathrooms or your kitchen, perhaps add some decking to your back yard, or add a pool – you may wish to use the existing equity in your home to fund the renovation.

If you already have some equity in your home, why not access these funds to renovate. If handled correctly a renovation can both improve the quality of life enjoyed by your family and add to the family wealth position.

Renovation Scenario:

Lets assume, your home is worth $380,000 and your outstanding mortgage is $ 220,000 - your net equity (wealth) position is $160,000 ($380,000 less $160,000). What if you could borrow $60,000 from your home loan to renovate your kitchen, bathroom, and back yard. If handled correctly, the renovation could add perhaps $120,000 to the value of your home, making your home worth $500,000.

Your home loan will increase by the cost of renovation to $280,000 – making your net equity (wealth) grow to $220,000 ($500,000 less $280,000). Therefore by borrowing some funds out of your existing home equity towards home renovation you managed to both improve your living conditions and add $60,000 to your net wealth.
 

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