UK Construction Loans
Construction loans are also termed as “story loans”.
This simply means that the lender has to know the story
behind the loan requirement. People often get confused between
construction loans and mortgages.
A construction loan is simple to understand. A construction
loan payment is paid back once the construction is completed
while only interest payments are made to the lender during
the period of construction. This ensures that the payments
are not very high during the construction.
Variable Rate Loans
Construction loans are generally variable rate loans that
are priced at the prime rate or some other short term interest
rate. These loans are considered to be expensively priced
as the rate is sometimes the same as that for other short
term loans. These loans are due for repayment as soon as the
construction is complete. It is not advisable to extend the
repayment period as the rate increases and so does the overall
cost of the construction loan.
A plan is drawn up by the constructor and given to the
lender, according to which the payment is split over different
periods of construction. The interest
is also charged according to the payment disbursed.
Conditions
Another factor of variation in these loans is how much the
lender is willing to invest. If the constructor owns the land,
it would be considered as equity on the loan.
There are different ways of acquiring construction loans.
Many times, homeowners apply for construction-to-permanent
financing schemes where the construction loan is converted
into a mortgage loan after the letter of occupancy is acquired.
The advantage and ease found here is that you only have
to have one letter and one application.
Some lending companies or agents that offer help to borrowers
looking for a construction loan have established websites.
Prospective borrowers can use these sites to fill out an application
form which is forwarded to lending companies for consideration.
Results are quickly provided and the prospective borrower
can contact the agent or the company by email or phone to
get any specific questions answered.
Common Construction Loans in the UK
In the UK, there are numerous companies that guide you through
the procedure of construction loans and help you to get through.
Certain companies that help in dealing with construction loans
also help with loan procedures. Through these companies, one
can easily acquire help for funding various stages of construction
and get through the procedures. Construction can be expensive
and these companies make it easy for you to finish your construction
project on time providing finance when needed.
In the UK, construction loans can be used for a variety
of purposes from a building construction to road construction
program. In brief, construction loans can be used for any
construction project
Related Articles
|
