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What you will need to qualify for a construction loan

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If you are beginning to look at construction loans, you might be wondering what you need to qualify for one. When you begin to apply, you will notice that your lender will need many documents at different stages throughout the build. Instead of needing these all at once, lenders sometimes require them to be given in stages. Usually, you will need to provide some documentation upfront to prove your finances and identity, while other things such as plans and contracts may be required at a later stage.

If you are looking for what you need to qualify for a construction loan, read on below.

What will be needed to initially apply for a construction loan?

When applying for a construction loan, there are a number of documents that your lender will need to see. These are generally the same as applying for any other loan:  

  • Proof of income – Usually in the form of bank statements and payslips
  • Proof of monthly expenses – These may include rent statements from your agent, car payments and utilities
  • Any assets in your name – These could include other bank accounts and properties
  • Any financial liabilities – These could be any credit cards or loans in your name.

Which documents will be needed before approval?

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In addition to the initial loan application documents, you may be asked to provide the following to your lender before they approve your construction loan. Many of these may be able to be obtained through your builder:

  • Signed and dated building contract – This will generally outline the building stages, construction length and the estimated final price of the build.
  • Building plans – These may not need to be council approved before you apply, though your lender will tell you if they do need to be
  • Builders Insurance forms – These may need to show:
  • Name of the property owner
  • Name of the building company
  • Insurance amount
  • Address of construction property
  • The expiry date of the insurance policy
  • Quotes for any additional works – If you plan to include items such as sheds or swimming pools, they may not be included in your loan. Your lender may need you to provide quotes for the cost of each item is added.
  • Quotes for any items that you intend to purchase – Building materials such as tiles may need to be quoted as well. If these are not included in your building plan, your lender may not budget in for them. This may mean that they would be left out of your valuation, and would not be included in the final value of your property. 

Which documents will be needed before the first drawdown stage?

Unlike a standard home loan, construction loans are progressively drawn-down. This means that you increase your borrowing as needed to pay for the construction. In order to be able to release the first round of funds to your builder, your lender may need you to provide:

  • A finalised and signed building contract – This contract will generally need to be signed and dated by both you and your builder
  • Council approved plans – In most cases, your building plans will need to be approved by your local council before the first stage of funds are released to you and your builder.

Which documents will be needed during the drawdown stages?

Throughout the different stages of construction, your builder will require payment. To be able to keep receiving funds, you may need to provide your lender with:

  • A completed and signed Progress Claim Certificate
  • Copies of all claims, invoices or receipts. Invoices are required before any claim relating to them can be processed so that your lender can verify where the funds are being spent.

While this may seem like an overwhelming amount of information, all of these documents are required in stages. That means that you will have time to prepare and collect any information needed. It’s always best to check with your lender before each stage, as they may only require some of these documents.

While this may seem like an overwhelming amount of information, all of these documents are required in stages. That means that you will have time to prepare and collect any information needed. It’s always best to check with your lender before each stage, as they may only require some of these documents.

Where does Tiger Finance help you qualify for a construction loan?

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With Tiger Finance, we can help to get you a construction loan quickly and easily. You will have a free consultation with one of our specialists, and we will tailor-make you a loan. We will negotiate with lenders on your behalf before you are approved.

We have helped countless Australians with both good and bad credit ratings get funding for their build. We understand that lending criteria from other lenders are too strict, and can stop you from achieving your goals. That is wrong, and it should not hold you back.

How We Can Help

Our finance specialists can help you find the right construction loan for your project. Construction finance can be a complicated topic, but we will find a loan that makes your dream build that much easier.

If you are one of the many Australians finding getting a construction loan difficult, Tiger Finance can make the process simple and pain-free. Call us today for your obligation-free initial consultation. 

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