St George Builds A Specialised Loan

The three little pigs got off lightly, only having to worry about straw, sticks, bricks and the Big Bad Wolf, but anyone who is planning to build knows there's a lot more involved. Banks are finding ways to get into this market, with some offering specially created financial products such as the St George Bank Residential Construction Loan.

The cost of building your own home certainly adds up. For a start, you need a deposit to buy the land, then you need to pay stamp duty. Once you've got somewhere to build, you need to pay a deposit to your builder and set up progress payments for each stage of the building process. You also need to cover the cost of insurance, legal costs and inspections.

St George's Residential Construction Loan offers a range of options on their Discount Variable, Standard Variable and Portfolio Loans. St George can start you off by setting up a schedule to pay builders, and time the payments to be made after each stage of building has been inspected and approved.

Standard home loans usually involve a home valuation to determine the amount you are able to borrow, according to the Loan to Valuation Rate (LVR) set by the bank. When you're building, however, as there is not yet a house to value, St George require a lot of paperwork from you so they can determine the final value of the property you are building.

To estimate the value of the home you have planned to build, St George need details of construction cost estimates including tenders, costs and quotes from your builder, council approved plans and documented details of any construction work to be undertaken by you, your family, friends or sub-contractors.

St George's Residential Construction Loan range of options includes their no-deposit loan, so effectively you could borrow up to 100% of the final value of your house. Of course, when the LVR is greater than 80%, you would need to also cover the cost of Lenders Mortgage Insurance, which covers St George if you miss any of your repayments. It's important to note that Lenders Mortgage Insurance covers only the lender. To cover yourself during any period you may miss a payment because of injury, illness or unemployment, you would need mortgage protection insurance.

If you're thinking about building, explore all of your home loan options and don't limit yourself to products that appear to be specially-built for people in your situation. A number of products from different lenders could suit your requirements and offer the flexibility and features you need to support your building project.