Construction Finance
A construction loan provides the necessary funds for builders, developers, or renovators to pay for construction while the project is underway. A construction loan can be a straightforward loan or a split-finance loan which combines both a mortgage and a construction loan.
Construction loans are different from the usual mortgage type of loan. Construction loans are unique because they are made as progress payments during different stages of construction.
The Benefits of a Construction Loan:
Builders, homeowners and developers can secure construction loans so that they are not forced to accept loans that are not right for their situation. Additionally, these loans allow for progress payments to be made.
As a sort of insurance policy, progress payments provide protection for borrowers. If a construction work is improperly done or incomplete, the contractor or builder will not receive payment until the work is satisfactory and in accordance with the contract.
Some of the great benefits construction loan offer are:
- Flexible Terms
- Low Interest Options
- Building project plan based
- Split loan options
- Drawdown facilities
- Allows for payment variations in building costs and construction times
Additionally, construction loans come with the added benefit of only charging interest on the amount borrowed during the term of the loan. The borrower won’t be required to pay interest on all loan amounts if not all of the available loan amount is used.