10 Best Construction Loans in Australia & How to Get Them

This article will explore the 10 best construction loans in Australia.

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Construction lending may be a good option if you want to start your own business. You will need to borrow money to do this, and it is important to know how to locate it.

Although construction lending can seem daunting, you don’t need to worry about it if you do your research.

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If you want to learn how to secure a construction loan in Australia from a reliable lender, this piece is for you. What loans are available to finance construction projects?

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These loans are better than other types of loans. Do I need to know any requirements or restrictions before applying for a loan?

Best Construction Loans in Australia
Photo credit: Shore Financial

What is a Construction Loan?

A construction loan is a short-term loan intended to fund building or restoration projects. These loans can purchase supplies and equipment, hire contractors, or remodel existing spaces. 

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These loans can be temporary and may last from six months to one year. A construction loan’s purpose is to help with cash flow problems while the project is in progress.

Although construction loans are more costly than traditional loans, they can still be an option for some situations.

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Construction loans are not the same as long-term financing. A homeowner might borrow money to remodel their kitchen, and the loan can be paid off once the work is completed and the homeowner no longer requires the extra cash flow.

Construction loans may be available for projects that temporarily impact your financial position, such as remodeling or renovations. It could be used to replace a kitchen, bathroom, or for other purposes.

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List of the 10 Best Construction Loans in Australia

We’ll be covering the top 10 construction loans in Australia. These are the best lenders to consider when searching for a loan. Each lender offers different loan options so that you can find the best fit for your company.

#1. Wintrust Mortgage

Wintrust is Australia’s largest mortgage provider. Their construction loan products are what make them most popular.

Wintrust offers loans for major home renovations and new construction projects. Refinancing, cash-out refinances, home equity transfer, and many other options are available when purchasing a home.

You can also get factoring and invoice financing through them. Wintrust offers construction loans that can be repaid at different interest rates and terms.

Many loan amounts are available, and you can choose the repayment terms. You can choose from various loan documents depending on what type of project you are working on, such as a trust deed, construction loan, or mortgage.

#2. National Home Loans Group

Nationwide Home Loans is Australia’s largest home loan lender. The company was founded as a mortgage broker in 1977 and has grown to be a fully owned subsidiary of the National Australia Bank Group.

They offer loans for home extensions, renovations, and new construction. Refinance, and Cash-out Refinance products are also available.

This allows you to borrow a lump sum, then repay it over a specified period. Nationwide Home Loans offers other loan products such as factoring and invoice financing.

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#3. Magnolia Bank

Magnolia Bank is a subsidiary of the ANZ Bank Group. They are Australia’s largest mortgage provider and offer a variety of financial products for both individuals and companies.

Magnolia has a variety of loan products for construction loans. Magnolia offers two loan products: renovations and renovations requiring a loan amount.

Before you can apply for a Magnolia loan, you must first be approved. After you have been approved, you can apply online for a loan through Magnolia.

#4. FMC Lending

FMC Lending is behind Iconic Property. FMC Lending is Australia’s largest property lender and offers a variety of financial products.

FMC Lending has a variety of loan products for construction loans. FMC Lending offers two types of loan products: renovations and new construction.

Before you can apply for a loan from FMC Lending, you must first be approved. After you have been approved, you can apply online for a loan.

#5. Nationwide Home Loans, Inc.

Nationwide Home Loans is behind Cash Store. They are Australia’s largest mortgage provider and offer a variety of financial products for both individuals and companies.

Nationwide Home Loans has a variety of loan products for construction loans, and nationwide Home Loans offers two loan products: renovations and new construction.

Before you can apply for a loan at Nationwide Home Loans, you must first be approved. After you have been approved, you can apply online for a loan.

#6. Normandy

Normandy, another Australian property lender with a strong focus on construction lending, is another. 

The company offers a variety of construction loans, including floating rate, fixed-rate, and hybrid loans. Normandy offers two types of loan products: renovations and new construction.

Before applying for a loan at Normandy, you must first be approved. After you have been approved, you can apply online for a loan.

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#7. GO Mortgage Corporation

GO Mortgage Corporation is a Queensland-based lender. They are one of Australia’s top-rated construction lenders and have rapidly risen to be the largest.

They offer many construction loan products, including interest-only and interest-only hybrid loans.

The GO Mortgage Corporation offers two loan products: renovations and new construction. Before you can apply for a loan at GO Mortgage Corporation, you must first be approved. After you have been approved, you can apply online for a loan.

#8. TD Bank

Another major lender based in Queensland is TD Bank. They are a new addition to the list of top Australian construction lenders. The TD Bank offers two loan products: renovations and new construction.

Before you can apply for a loan at TD Bank, you must first be approved. After you have been approved, you can apply online for a loan.

#9. VA Nationwide Home Loans

VA Nationwide Home Loans is Australia’s largest home loan lender. They were established in South Australia in 1959. 

VA Nationwide Home Loans has a variety of loan products for construction loans. VA Nationwide Home Loans offers two loan products: renovations and new construction.

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You must be authorized before applying for a loan via VA Nationwide Home Loans. After you have been approved, you can apply online for a loan.

#10. Flagstar

Flagstar is a Queensland-based regional lender. Flagstar is a new addition to Australia’s top construction lenders and has quickly grown to be one of the biggest.

Flagstar offers two types of loan products: renovations and new construction. Before applying for a loan from Flagstar, you must first be approved. After you have been approved, you can apply online for a loan.

FAQ

What is the Process of Obtaining Construction Loans in Australia?

The construction loan process will differ depending on which lender you choose. You will first need to be pre-approved.

The lender will provide an estimate based on the information you’ve supplied. The quote should include all fees, such as the origination fee. This is a fee that is paid to the lender. The next step is to fill out an application. 

You must include the application form, bank account information, and supporting documents.

Depending on the lender, more information may be required. Nothing is left to do but wait for the results.

Although you may think that getting a construction loan is a lengthy process, it takes only a few days.

What kind of Loan is Best for Construction?

Before applying for a loan for construction, you should decide if it is better to obtain a traditional or construction loan.

Home mortgages and credit cards are examples of traditional loans. Traditional loans tend to be long-term, and construction loans are usually short-term.

You can decide which loan you prefer by evaluating the terms and interest rates. When choosing between traditional and construction loans, there are many things to consider. These are the main ones.

Do Banks Give Loans for Construction?

The short answer to this question is no. Only a few private lenders can offer construction loans.

You can search online for these lenders using resources such as the Loan Market Association.

Construction loans are cheaper than other loans, so that you can save money. This advantage has its downsides.

One, construction lenders can be riskier than traditional lenders. Because the loan term is shorter, there may not be much recourse if the project fails.

Do you Need a Deposit for a Construction Loan in Australia?

Traditional loans require a deposit, and however, construction loans do not require a deposit.

Although this may sound like a safe option, it can still be risky. For example, construction loans might not be possible if the project exceeds its budget, and you might have to cancel the project if you don’t have sufficient funding.

Construction loans can also change hands more frequently than traditional loans, and you might have to reapply for a loan if your business changes hands.

Although construction loans might be an excellent fit for some people, they are not suitable.

How Do you Calculate Construction Interest?

The type of construction loan and the lender are all factors that affect the construction interest rate.

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In Victoria and New South Wales, for example, the construction interest rate is usually 10%.

On other projects, however, the interest rate may be as low as 4.4%. Calculating the interest rate on construction loans requires you to calculate the total amount of your loan and then subtract the amount of interest.

If the interest rate is 10% per year, the loan amount is $100 plus $10 interest. The interest on the loan amount is $10.

How Do you Calculate Construction Loan Payments?

You will be responsible for repaying the construction loan or paying the interest. The loan amount and length will affect the rate and amount of repayments.

It is not uncommon for loan repayments to be more expensive if a construction loan is used for a single project with high investment costs.

Because the return on investment in large projects is usually low, loan repayments are higher.

If your $100,000 construction loan has an interest rate of 10% and a repayment term of 10 years, you’ll pay $8,100 each month.

How Do Repayments on a Construction Loan Work?

The loan amount and interest will remain the same for the entire term, which means you will not make any profit from your investment in the construction project.

If your $100,000 construction loan has an interest rate of 10% and a repayment term of 10 years, you’ll pay $8,100 each month.

You will have to repay $100,000 after 10 years, and you will not be able to keep $98,900. The interest you will pay on this loan is $1,000 less.

Is a Construction Loan a Good Idea?

Not everyone is a candidate for construction loans. You will first need to decide if the project is worthwhile.

It may be challenging because you don’t know if the project will succeed. You should also consider equity crowdfunding as a financing option.

This option is very popular and may be the best way to raise funds. Equity crowdfunding is a good option if you have an idea for an online company but have never invested. 

The investors invest the money as well as equity in the project. It’s a win-win situation because you and the investors walk away with the money.

Construction lending is a great option if you need to borrow money to start your business. There are many options for construction loans in Australia, and many top-rated lenders are available, such as Nationwide and TD Bank.

You don’t need to rush when getting construction loans, and you should take your time and choose wisely.

Watch the video below to know the best construction loans in Australia:

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