A construction loan for a home or commercial purposes works specifically to finance a new building project. During the initial purchase of land and construction, the loan operates as an interest-only loan. Individual drawdown payments occur on completion of each major construction goal. This continues at intervals as the project continues once the building is complete, the construction loan changes to another kind of loan which is principle and interest.
Our Lastest Construction
Loan Interest Rates
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Interest Rates Rates vary depending on Loan to Value Ratio (LVR)
By their very nature, projects needing construction loans will generate no profit until the completion and occupation of the project. Unless of course land value increases.
Although it seems painfully absurd, many banks and other large lending institutions refuse to finance construction loans because a property under construction does not create income. Here at Quantum Finance Australia, we believe our borrowers should not need to struggle through such regulations. We are of the opinion that a potentially profitable endeavour deserves funding.
Loan Value Considerations
Construction loans are an area that requires some specialised knowledge because the calculations are on a Loan To Value Ratio (LVR) ratio as well as a Loan To Cost Ratio. It is not uncommon to hear of various lending institutions who are not able to calculate a construction loan correctly. Part of this problem is due to the fact that banks and other large lending organisations communicate poorly and many important details get lost in the maze of people and paperwork.
Getting all of the proverbial ducks in a row is crucial for a construction loan; when a problem with loan calculation arises, the entire project can be thrown off or worse.
At Quantum Finance Australia our professionals know and understand construction loans and the right way to calculate these loans.
Getting all of the proverbial ducks in a row is crucial for a construction loan; when a problem with loan calculation arises, the entire project can be thrown off or worse. At Quantum Finance Australia our professionals know and understand construction loans and the right way to calculate these loans. Correct calculation eliminates any possibility of last minutes surprises leading to disasters.
How it works?
The first thing for you to know is that the construction loan process is structured and calculated differently than other
loans. When you begin the application process, we assign a consulting expert to your loan. He or she will work side by side
with you and be available to answer questions and give wise counsel.
Before we can calculate the loan amount, we will put together a budget.
Your construction loan budget is made up of several components.
- Soft Costs
- Hard Costs
- Closing Costs
- Inspection Fees
- The Pay Off Amount for the Lot
Soft Costs & hard costs
In construction finance, ‘Soft Costs’ are indirect or off-site costs made up of permits, fees, the cost of plans
from the architect, and necessary fees for the expertise needed from engineers.
The term ‘Hard Costs’ encompasses all of the on-site work and the costs necessary to physically build the structure.
Do I need a professional
contractor to get a loan?
The owner-builder situation is one of the many areas where dealing with a private funding source makes your life easier. Many banks and large lending companies feel this arrangement adds an element of chance to a venture they already view as risky. However unfounded, borrowers may find they are rejected or significantly limited in their loan amounts. For example, a bank might offer an owner-builder mortgage with the amount restricted to 60 per cent of the total land value. We are interested in helping and not hindering your building progress. Therefore, we will focus on more tangible costs such as estimated costs of material and labour as opposed to making you navigate a maze of restrictions and paperwork.
Because we are not biased towards any bank or lender and large mortgage companies, we can fund construction loans for numerous kinds of building projects such as:
- New residential- single family homes
- New residential- multiple family units
- New residential- apartment or high-rise complex
- Renovate residential (all types)
- New commercial development
- Commercial property renovation
- Government sponsored land development construction projects
Our role in securing finance?
At Quantum Finance Australia we will secure the loan for your construction work by doing the following:
- Research and analyse the building project looking at the details from the start through completion
- Work with funding sources to craft a loan that maximises returns on investments for all parties involved.
Total developments costings
Our Total Cost of Development (TDC) cap is presently at 80 per cent. This amount allows for nearly all of your upfront costs.
Contrast that number with much lower bank TCD offerings, and you will see how Quantum Finance Australia can save you money on your loan as well as on your out of pocket expenses.
Our offer to you
At Quantum Finance Australia, we bring our experience and expertise to the table for every transaction we complete. Additionally, we are interested in forming stable relationships with our borrowers because we see our clients as more than loan numbers. Furthermore, we are proud to offer our clients the following:
- Expedient loan decisions, often within 24 hours
- The ability to offer customised and flexible credit policies
- Access to your funding quickly after your loan is finalised.
- A thorough understanding of construction loans