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Lowest Construction Home Loan Comparison Rates in 2017

If you plan on building your next home instead of buying an existing one, then a regular home loan won’t cut it. You’ll need a construction home loan. Canstar walks you through how to find the lowest construction loan comparison rates available.

Construction loans are a unique beast in that interest is only charged on the amounts drawn down so far, which saves you money while you’re trying to get your new home built. But the interest rate you pay on a construction loan is still important, and it can make tens of thousands of dollars of difference over the life of your loan.

For this reason, Canstar has assembled a guide to the lowest rate construction loans available for Australian home builders.

How does interest work on a construction loan?

Interest is charged on the amounts drawn down so far on the loan.

For a hypothetical example, if $100,00 had been drawn down on a $300,000 at the 3rd phase of construction, you would be charged interest on $100,000 only. You wouldn’t start paying interest on the full $300,000 loan until the house has been fully constructed.

Construction loans are often interest only loans for the first 12 months before reverting to a standard principal and interest loan afterwards.

Generally, interest only (or principal and interest) repayments will be made upon completion of the following stages of construction:

  1. The slab or base
  2. The frame
  3. Lock-up
  4. Fit-out and fixing
  5. Completion

Construction loan interest rates vary more than those of standard home loans, so before commencing this process, you should look around to find a good interest rate. Canstar can help you with that.  Read on to find out some of the construction loans on the Canstar database with the lowest comparison rates.

Not sure what we mean by an advertised rate or a comparison rate? The home loan comparison rate is a percentage-based figure that represents the total cost per year for a loan of $150,000, including the advertised interest rate and any fees on the loan.

*Comparison rate based on loan amount of $150,000. Read the Comparison Rate Warning.

Compare Construction Loans with Canstar

Lowest construction loan interest rates

The tables below show some of the lowest rates available on the Canstar database for both variable rate and 3-year fixed rate construction loans, based on a loan amount of $350,000 and an LVR of 80%. The displays are sorted by comparison rate (lowest to highest), then provider name (alphabetically).

Not sure whether you need a variable or fixed rate loan? We explain the pros and cons here, or you can learn more about each type individually:

Lowest variable construction loan interest rates

The table below shows some of the lowest rates available on the Canstar database for variable rate construction loans, based on a loan amount of $350,000 and an LVR of 80% in NSW. The display is sorted by comparison rate (lowest to highest), then provider name (alphabetically).

*Comparison rate based on loan amount of $150,000. Read the Comparison Rate Warning.

You can compare these and other construction loans using the Canstar website:

Compare Construction Loans

Lowest 3-year fixed construction loan interest rates

The table below shows some of the lowest rates available on the Canstar database for 3-year fixed rate construction loans, based on a loan amount of $350,000 and an LVR of 80% in NSW. The display is sorted by comparison rate (lowest to highest), then provider name (alphabetically).

*Comparison rate based on loan amount of $150,000. Read the Comparison Rate Warning.

You can compare these and other construction loans using the Canstar website:

Compare Construction Loans

Compare construction loans with Canstar

Ready to apply for a construction loan now? The following table shows the lowest comparison rates on construction loans that have links directly to the provider’s websites. Based on a loan amount of $350,000 and an LVR of 80% in NSW. The display is sorted by comparison rate (lowest to highest), then provider name (alphabetically).

*Comparison rate based on loan amount of $150,000. Read the Comparison Rate Warning.

Of the 95 lenders on Canstar’s database as of March 2017, 83 offer construction loans, so you aren’t short of options when it comes to finding the right construction loan. The lenders in the tables throughout this article only scratch the surface of what’s available, and you can compare these and more construction loans from lenders around Australia using our website.

Compare Construction Loans

Not sure whether you need a construction loan or another type of home loan? Canstar has also written on various other types of home loans, such as:

Compare Home Loans

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