As we continue to see challenges in the post-Covid mortgage market that we had not encountered for many years prior, one trend that we’re seeing in increasing numbers is that of construction and renovation loans running out before the job is complete.
Before the pandemic when interest rates were low, supply chains were plentiful and labourers were easy to come by, many homeowners who found themselves outgrowing their current home chose to renovate or rebuild rather than going through the torturous process of house hunting and moving. This also came with the added bonus of increasing the value of their current property.
In that mortgage climate, it was the perfect solution. Fast forward to 2023, and many of these homeowners, mostly Mums and Dads with families, are finding that their approved loan is not enough to cover the original planned renovation or construction cost. Increased costs in the building industry, longer delivery times and a severe labour shortage have seen costs to the consumer blow way out, meaning that what they were advised their plans would cost back then is no longer the case.
So, what do they do? They refinance, or ask for an increase on the loan. But thanks to nine straight rate rises over the past few months, banks and lenders are now tightening their loan criteria and becoming more risk-averse, so inevitably the answer is no.
At this point, they should see an experienced mortgage broker like the experts at AAA Mortgages. The right broker will be able to push back if they’ve already been knocked back for an increase or refinance by their current bank or lender, and if that still doesn’t work, the next step is to look at other options. With extensive and detailed industry knowledge, brokers have the ability to source a wide range of tailored solutions with both bank and non-bank lenders.
At AAA Mortgages, we have all the solutions, tips and tricks to make sure you can complete your renovation, rebuild or new build. There is no job too small or too big, whether you’re a property developer or just need an extra room or two for your growing family. We work with a wide range of bank and non-bank lenders, so you can be confident that we’ll get your construction loan sorted. Contact us at AAA Mortgages today for an obligation free meeting.