Browse Forums Home Finance 1 Sep 21, 2023 12:11 am Hi, I am clueless about this but am starting to look into doing a knock down rebuild. There is sufficient equity in the property, so I am pondering investigating an equity loan versus a construction loan. If it was an equity loan, my (uneducated) understanding is that I could leave the money sitting against the loan until it is needed for payments, thereby reducing interest accruals. I would appreciate any insights that may help me including pros and cons, things to consider and things to ask about. Re: KDR - Home Equity Loan vs Construction Loan 2Sep 21, 2023 9:03 am in a construction loan, you only pay for interest on the portion used from the loan amount available to you. Your choice will be more dictated by your lenders view around the risk to the underlying asset - ie you want to knock down so the way your equity works changes. You have equity in the property that's there now. When you knock it down, that changes the security and its overall value/risk proposition. Have a chat to a broker about your options. Re: KDR - Home Equity Loan vs Construction Loan 3Sep 21, 2023 9:32 am The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck. Technically if you have a loan the lender will not want you to knock down their security however if there is enough equity in the land Macquarie has a policy that suits this. Ask friends and family to recommend a good broker. Rebecca Jarrett-Dalton Property crazy expert mortgage broker, love building new homes! Two Red Shoes mortgage broker http://www.tworedshoes.com.au/building We were lucky in that our old house was so small (86 square metres) compared to the new house, they were able to take enough readings around the old backyard house before… 8 38261 Hi, I am looking into doing a KDR in Melbourne and am contemplating using Kialla Homes. I am looking for feedback on them from others who have built with them. 0 14039 |