Prefabrication is more favorable financing conditions for building a house. Find out why!
Ways to finance building a house
Building a home is the biggest investment in most people’s lives. The costs of such an undertaking are a big challenge, and everyone would like to move into their own home as soon as possible. Fortunately, there are several good methods of obtaining funds, and among them the most popular is a mortgage loan. How do you get one? What is required? And is there a way to make it easier to get loans?
Various sources of funds for construction
A loan cannot be the only source of financing. An appropriate down payment is required (from 10 to even over 30%, depending on the property owned and the investor’s income situation). Before starting the formalities, it is worth doing some research on how much money you will be able to get and how it will be obtained. The most commonly used funds are listed below.
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What is necessary to obtain a loan?
The first step in obtaining a loan is to prepare an appropriate cost estimate, which will allow the construction process to proceed without complications. The amount of the tranche paid must correspond to the amount of the construction costs of a given stage, so that there is no problem with settling it with the bank. In traditional construction, this is a difficult task due to price changes during construction (materials and contractors’ rates). There is also a risk that additional, previously unforeseen costs will appear. This problem is largely solved by the construction of prefabricated houses – the price guarantee makes it easier to prepare an appropriate cost estimate.
The next step is to document to the bank that you have the required down payment. If you already have a plot of land for development, its value is considered your down payment, assuming that it is not already encumbered by another mortgage. If the investor already has their own apartment (not encumbered by a loan), but does not want to sell it, in some banks they can use it as your down payment. Whenever investors plan to use the funds from a loan for the planned construction, we recommend contacting a financial expert who cooperates with us, who will individually and reliably verify the possibilities of financing the investment and answer any questions that arise on this topic.
Documents to prepare
Before an investor goes to the bank, he must prepare the appropriate documents.
Real estate valuation, in which a real estate appraiser estimates the current value of the property, approves the cost estimate, and estimates the target value of the property that is to serve as security for the loan.
Construction schedule
The received loan is usually divided into tranches and paid out in stages as construction progresses. To receive the next part of the loan, it is necessary to document the use of the previous money in accordance with the agreement. That is why it is so important to properly prepare the cost estimate so that at each stage the financing covers the required scope of work (also taking into account unplanned costs). In our offer, we provide the purchase of materials and the construction team ourselves. Our clients are sure that the loan settlement will go according to plan. Each stage must also be assessed by the construction manager or inspector in terms of meeting the technical conditions for 2021.
The construction time is very important, during this time the loan is subject to a grace period in the repayment of capital. The investor pays interest on the disbursed amount of the loan, while the repayment of capital installments is suspended. The longer it takes to build a house, the more expensive our loan is in the final calculation.
Our financial expert will individually and reliably verify your investment financing options and answer any questions that may arise on this topic. Write to domy@mabudo.pl
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