Financing your Melbourne build the right way
Building a home in Melbourne, whether through a knock down rebuild or a brand‑new project, requires the right finance structure. Construction loans are designed specifically for this purpose and offer flexibility that standard home loans do not. They allow funds to be released in stages as the build progresses, which helps manage cash flow and ensures you only pay interest on what you have used.
How to fund your renovation
This video explains the two main ways to fund a construction project. The first option is using existing equity, which can reduce the need for additional borrowing and streamline the approval process. The second option is taking out a construction loan, which releases funds in stages as the build progresses and helps manage cash flow throughout the project. The video outlines how each method works and what borrowers should consider when choosing the right approach for their situation.
Using a construction loan for a knock down rebuild
Construction loans are commonly used for knock down rebuild projects across Melbourne. The loan can be structured to cover both the land and the construction costs, depending on how the project is arranged and the lender’s policies. This makes it a practical option for homeowners who want to replace an existing dwelling with a new build.
Getting a construction loan when you already own the land
If you already own the land, it can often be used as security for the construction loan. The lender will assess the combined value of the land and the completed build when determining how much you can borrow. This can strengthen your application and reduce the amount of upfront cash required.
How interest works during construction
Interest is charged only on the portion of the loan that has been drawn down. Because funds are released in stages, your interest repayments during construction are usually lower than repayments on a fully drawn loan. This staged approach helps keep costs manageable while the build is underway.
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