Get access to funds needed to start or complete your construction project
Construction Loans
Before trying to obtain a construction loan, it’s a good idea to know how much you can afford. Using a great calculator removes the guesswork.
Reduce the stress and frustration of obtaining a construction loan when you work with the experts at Donkey Finance. Get the help you need now!
Construction loan as a financing option
When you require construction financing and are going to be building, you can trust our team of UK professionals. We know how to help you get building and construction loans so you can afford to build the home of your dreams.
At Donkey Finance, we recognise how important it is to have good underwriting so you can receive fantastic rates on your building finance. This gives you the opportunity to borrow as much as you want without worrying about how you’ll pay it back. When you work with us, you can relax knowing that you’ll have a terrific and customised experience receiving your home building loan. This is better than working with a firm that only sees you as a number.
A construction loan is a type of development finance that is just for professionals. Our loan search tool can show you how development finance rates compare to those of high-street banks and other lenders:
Using a construction loan interest calculator
A calculator made just for this purpose is the best method to figure out your payments and what you owe on a construction loan because they are more complicated than regular mortgages.
You can figure out the payments by answering a few questions about how much money you have borrowed and what your current interest rate is. This is a lot easier to understand using a construction loan payback calculator than with your own maths.
Information a home building loan calculator requires
A lot of people use a home construction loan repayment calculator to figure out how much they can afford to borrow because they want to be ready for a construction loan.
You need to know how much the renovation will cost, how much the house will be worth after it’s done, how long the project will take, and if you’re making a down payment. Also, be ready to write down the interest rate, the length of the loan, and whether you want to pay solely interest or both interest and principle.
We try to make the whole process of getting ready for and acquiring a construction loan as straightforward as possible at Donkey Finance. Our customers don’t have to worry about figuring out how much they can spend for their new home on their own with a home building loan calculator.
It’s always a good idea to try to figure out the numbers on your own and get a sense of what type of financing you can afford. However, the best approach to receive accurate data that will help you make a decision about what to build is to contact us.
Construction loan example
Before signing a contract for a construction loan, it’s important that you understand how they work to ensure that you know the ins and outs of the process.
When a construction loan may be required
It’s crucial to get a construction loan before you start building a new home so you have the money you need. This may sound easy, but it’s crucial to know how the construction loan process works and what you need to do before you start so that you are ready for what comes next.
To acquire a construction loan, you must meet the standards of the firm that is lending you the money. To get a construction loan, you will need to provide the lender your income and debit information to show that you can pay back the money you borrow. This is the same as getting a mortgage.
Construction loan drawdown schedule
Your builder will need to be paid for materials and contractors, so your financing will be granted in a series of “draws.” This strategy for drawing on a construction loan lets them receive the money they need to keep building.
To get the draws, there are usually inspections to make sure that the building process is going well and the way it should.
At the end of the building process, there is a final inspection to make sure that the house is finished and ready for someone to live in.
How a construction loan works
If you want to receive a construction loan, you need to make sure you have enough money for the down payment. Otherwise, it will be very hard to get the money you need. Once you show that you can pay back the loan, you will need to select a builder who can finish your new home in the time period given by the lender. The home building loan process will be a little different depending on the type of loan you choose. One sort of financing will turn into a conventional mortgage when the house is done being built, but the other type will require you to get a mortgage before you move in and after the house is built.
It could feel like the home construction loan procedure is too much to handle, but we’re here to assist you get through it and make it as easy and stress-free as possible. We’re here to help you with any construction financing questions, no matter where you are in the planning process.
Construction loan types
A lot of people know that there are two kinds of construction loans, but not everyone knows which one is best for them. Get the money and information you need.
It’s crucial to have all the information you need to make a smart choice when you have to choose between two types of construction loans. Some people do better with permanent loans for construction, while others need separate loans for construction and development.
For the typical individual, it can be hard to choose the appropriate loan for their needs. That’s why Donkey Finance specialises in helping people obtain a construction loan for a new building or restoration project.
- Construction to permanent loans: If you pick construction over permanent loans, you’ll only have to pay for closing once, which is a big plus. The interest rates on these loans will alter during construction. With a construction-to-perm loan, you only have to pay interest on the amount you owe. Once the building or remodelling is done, the construction perm loan will turn into a conventional mortgage. When the time comes, you’ll need to compare rates and pick the best one so you don’t spend too much for your mortgage.
- Stand-alone loans: A stand-alone loan, often called a construction bridge loan, is another way to get money for building. You will have to pay two sets of closing costs, and you can’t lock in a maximum mortgage rate like you can with a construction permanent loan. However, you don’t need as much money for a down payment, which many people find useful. This is fantastic if you plan to sell your old house and use the money to pay off the amount on your new property. There are some big benefits to construction bridge loans, but you should always be worried that you won’t be able to get a mortgage after the building is done. This is especially true if your money situation gets worse during construction, which could leave you with no way to pay for your new home.
It’s not always easy to figure out which type of financing is best for you, which is why we help our customers make the proper choice. No matter what kind of construction loan you need, we’re delighted to chat to you about your needs and existing position to make sure you obtain the correct kind of financing and can build the home you’ve always wanted.
Construction Loans for Builders
Builders need construction loans to pay for new projects or modifications. These short-term loans give you the money you need to pay for materials, labour, and other costs throughout the building process. They are usually given out in stages, or “draws,” that are timed with project milestones to make sure that money is available as work moves forward. Builders have to be very careful with these loans to stay on budget and on schedule because the interest rates are usually higher than those of regular mortgages and they need a precise building plan. After the project is done, the construction loan is frequently turned into a long-term mortgage, which makes it easier to pay back.
Construction loan repayments
Using a house construction loan calculator, it’s rather simple to find out how much money you will owe based on the type of construction loan you have.
Your payments will probably be based on how much money the builder has actually drawn. If you were given the complete amount at the start of the loan, you will need to use a building loan calculator to figure out how much you owe on the whole loan.
You can use a construction loan calculator to figure out the interest and payment on the amount you owe at the time to find out how much money you will have to pay at any given period.
Construction loan rates
When you look for a construction loan, you should think about the interest rate because it can have a big effect on how much you have to pay each month.
When you think about getting a construction loan, you need to think about how much you want to borrow and how much the loan will cost, which includes the average interest rate.
Sadly, the rates on construction loans can make a big difference in how much you have to pay each month, so it’s crucial to take the time to select the best one. It’s also crucial to know what the current construction loan rates are and what can make them alter.
Consider your down payment
The quantity of your down payment will have a direct effect on the interest you will have to pay. This is because if you can’t pay a lot of your loan back right once, you’ll probably have to pay a higher interest rate.
You should always check the current rates for house building loans so you know how much you’ll have to pay. It’s crucial to check construction loan interest rates often because they can alter at any time.
Changing your interest rates on construction loans
If you lock in your interest rate and it goes down while your home is being built, you might be able to lower your rate. You will have to pay a charge for this, which will make your closing expenses higher, but since construction loan rates change constantly, this is usually a nice alternative to have.
If you plan to pay off your mortgage over thirty years, a lower rate can save you a lot of money on your monthly payments and the total amount of interest you pay over the life of the loan.
Your permanent loan
Once your loan is permanent, you will get a permanent rate. You can do this when you switch to a mortgage, and it can also happen as part of a one-step financing for building. To make sure you get the greatest deal, check the current interest rates for construction loans at every step of the way.
Make sure you deal with an expert to receive the greatest pricing. We at Donkey Finance know how important low rates are and how they can save you a lot of money over time. That’s why we work hard to give our customers the best prices available.
You can receive the correct funding for your building project by looking at the current interest rates on construction loans and knowing all of your possibilities.
Applying for a loan
Applying for a construction loan has never been easier, as we have worked hard to streamline and simplify the process for our customers. This means that once we have your information, we will do all of the work to provide you with a great building loan.
We understand that you are in the market for the cheapest construction loan, and we offer very competitive rates as well as quality underwriting so that you get the most money for your payments.
Use our construction loan calculator to make your application.
After approval
Once you have been approved for your construction loan, it is easy enough for your builder to access the money that they need in order to complete your building project without you having to deal with the hassle of draws and getting permission to move forward for each stage of the build. These “draws” allow money to be taken out of the budget to pay for contractors and materials, which means that your construction is always moving forward.
Whether you are interested in construction development finance for home renovation or a construction loan to build a house, we can help you get the money that you need. Regular inspections of the building as well as open communication are important, which is why so many customers trust us as their construction loan lender.
We know that building is very exciting but can also be very stressful, and we work hard to help you get a construction loan and build the home of your dreams. Whether you need large or small construction loans or are looking for a short-term construction loan, we are here to help get you the money that you need in order to bring your dreams to life.
Construction Loan FAQ’s
How can I get a construction loan?
The best way to start the process of obtaining a construction loan to build a new home or renovate your current house is to work with a company that specialises in this type of work. After deciding who you are going to work with and what kind of construction loan you need, be ready to bring all of your documents to show that you are financially able to repay the loan. At Donkey Finance, we can answer all of your questions and simplify the process for you to make it as seamless as possible.
How long does it take to get a construction loan?
The process to get a construction loan usually takes between one and two months, depending on how busy the loan officer is, how prepared you are with documents, and how quickly the company you hire to provide you with a loan is able to close. While some construction loans can be completed and closed in under a month, the normal time is a lot longer due to delays and the importance of having the right information for the loan.
How do construction loans work for renovations?
Financing your home renovation is easy when you opt for a construction loan. While most development loans are used for a new build, you can use a construction loan to finance renovation work as well, but you have to be prepared. Make sure that you know exactly how much money you need and how long the work will take, and that you already have someone ready to start the renovations as soon as you have approval. The building company will then take draws on the money, just like when building a new home, to pay for materials and labour.
What are the requirements for a construction loan?
Having the right information will make getting a construction loan a lot easier. You will need a comprehensive plan of the build as well as a layout of the construction for the lender. Depending on the type of financing you choose, you may need to make a down payment. Appraisals during the build are necessary, and you will have to meet all the eligibility criteria, including credit, ability to repay, employment, and other factors.
What credit score is needed for a construction loan?
The credit score that you will need to obtain a construction loan will vary depending on how much money you are going to borrow. The higher the amount of the loan, the higher your credit score needs to be. It is not uncommon for lenders to look for scores of 680 or higher.
