This loan structure is used for the purpose of constructing a dwelling either for investment or owner occupation purposes. This loan facility requires for council approved plans prior to obtaining a formal approval.
The loan is usually drawn down over 5 progressive payments during the construction period. Payments are made directly to the building company. The repayments are based on interest only (the repayments are based on the market variable interest rate) until the construction is completed. It then reverts to a Variable Rate Loan at the end of the construction period or other type of loan structure in agreement with the bank.
This facility type does not have the flexibility of adding loan features as allowed with other loan types.