Working FIFO as a truck driver means you're earning solid money, but it also means you're away from home for extended periods. When you're ready to build your dream home, a construction loan might be exactly what you need to make it happen.
What Makes Construction Loans Different
Unlike regular home loans, construction loans work on a progressive drawdown system. This means the lender will only charge interest on the amount drawn down, not the full loan amount from day one. As your registered builder completes various stages of the project, you'll receive progress payments through instalments.
The process involves several construction milestones where your lender will inspect the work and release funds accordingly. You'll typically have interest-only repayment options during the building phase, which helps manage cash flow while your home takes shape.
Getting Your Plans in Order
Before applying for a loan, you'll need to make a plan that covers several key areas:
• Location and land: Find your ideal location and ensure you have suitable land or are prepared to demolish existing property for your new build
• Council requirements: Obtain council plans, permits, and check for any council restrictions or council regulations
• Building plans: Work with architects and get a development application if required
• Fixed price contracts: Most lenders prefer these over cost-plus arrangements
• House & land packages: These can streamline the application process
Understanding the Financial Structure
Construction loans typically require an 'as if complete' valuation, which estimates your property's value once finished. The interest rate during construction may differ from your eventual home loan rate. Your loan amount will be based on this completed value, minus your deposit.
The Progressive Payment Schedule outlines when funds will be released. Common stages include:
- Foundation and slab
- Frame and roof
- Lock-up stage (walls, windows, doors)
- Fixing stage (plumbing, electrical)
- Practical completion
What FIFO Workers Need to Consider
As a FIFO truck driver, your income structure might look different from traditional borrowers, but many lenders understand and work with FIFO arrangements. You'll need to demonstrate consistent income and may need to account for:
• Timing: You must commence building within a set period from the Disclosure Date
• Oversight: Being away for work means you might need trusted representatives to liaise with your registered builder
• Additional costs: Budget for Out of Contract Items not included in your main contract, plus potential additional payments for variations
Managing Costs and Payments
Construction loans help you pay sub-contractors and suppliers as work progresses. However, be aware of fees like Progressive Drawing Fees that apply each time funds are released. Some projects might qualify as major home renovations rather than new builds, which could affect your loan structure.
If you're buying off the plan, the process differs slightly as the developer manages construction, but you'll still need to understand the payment timeline.
Working with Specialists
Your project will involve various tradespeople including plumbers, electricians, and other specialists. A home improvement loan might cover some upgrades, but ensure all work aligns with your approved plans and budget.
For FIFO workers, having a mortgage broker who understands your unique situation can make the difference between approval and rejection. They can help you access construction loan options from banks and lenders across Australia, finding the right fit for your circumstances.
Price Range Planning
Be realistic about your price range from the start. Construction costs can vary, and having a buffer for unexpected expenses helps prevent stress during the build. Remember, you're not just borrowing for today's costs but creating an asset for your future.
Building your dream home while working FIFO requires careful planning and the right financial partner. With proper preparation and expert guidance, you can turn your vision into reality.
Call one of our team or book an appointment at a time that works for you. We understand FIFO schedules and can work around your roster to help make your dream home a reality.
