A construction loan is a short-term loan that funds the construction of a building or renovation of an existing property. Construction loans are often used by builders or property developers to fund large projects.
How it works
Construction loans are usually disbursed in stages based on the progress of the construction project.
The loan payments are made at regular intervals to cover the construction period.
Some construction loans automatically convert to permanent mortgages when the construction is complete. Others end and require refinancing.
**Who can get a construction loan?
Homebuyers can use construction loans to build a new home or renovate an existing home.
Builders and property developers can use construction loans to fund large construction projects.
**What do you need to apply for a construction loan?
You'll need to provide documents such as proof of identity, proof of residence, proof of income, and property-related documents.
You'll also need to have a credit score that's high enough to get attractive terms.
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