HomeStart rolls out fixed rate construction loan

HomeStart, a non-bank lender backed by the South Australian government, has launched a three-year fixed rate construction loan at 2.89 per cent (4.10 per cent, comparison).

The lender noted that while housing construction in South Australia has been “booming”, this has led to rising costs and longer construction lead times for many new home buyers entering the market. 

As such, it has launched the new product to help “relieve some of the financial burden” for South Australian borrowers building their own homes.

The loan allows customers to fix their interest rate at the beginning of the construction period, rather than at the end, and enables buyers to progressively draw down on their approved loan to make payments to their builder as key stages of their home are completed. 

HomeStart said it will also offer customers the option of not making any repayments for the first nine months of the build, or until construction is complete (whichever comes first), so that they “don’t need to cover loan repayments as well as rent or other payments on their current home”.

Speaking of the new fixed rate construction loan, outgoing HomeStart CEO John Oliver said: “Fixed rates are attractive to many home buyers because it helps them to better plan and budget for their new home.

“The fixed rate construction loan is being offered under both our HomeStart Home Loan and Graduate Loan with a deposit as low as 3 per cent, and no lender’s mortgage insurance is required.” 

Mr Oliver announced earlier this week that he will step down from his role at the end of this year, following 12 years at the helm, and move out of “full-time corporate life”.

[Related: Housing construction approvals continue to decline: ABS]