Rate Money launches new construction loan

Rate Money has developed full and alternative documentation (alt doc) options for the construction loan, allowing those on alt doc to supply an accountant declaration as evidence of payment history.

The Elevate Construction loan offers a 30-year term and an additional 18 months for the construction period, a feature that the chief executive said was “not typically included by other lenders”.

The home loan provider is also offering to discount a borrower’s rate by 0.2 per cent on properties that meet or exceed the Nationwide House Energy Rating Scheme’s (NatHERS) seven-star rating, which measures the energy efficiency of a home on a score out of 10.

The product’s interest rates start from 7.49 per cent and have a maximum loan-to-value ratio (LVR) of 80 per cent for loans of up to $1.5 million in metro and extended metro areas. For regions beyond this, the Elevate Construction loan offers an LVR of up to 75 per cent on loans up to $1 million.

According to Rate Money, there are no application fees associated with the product as well as no construction fee for borrowers providing full documentation. However, a 1 per cent construction fee is applied to alt doc loans.

The mortgage manager said that the product would only charge a singular fee that covers progress payments, property valuation, and settlement fees.

Interest-only repayment options are only available on the loan during the construction period.

The Elevate Construction loan also manages progress payments for referral partners, which is a “significant advantage for mortgage brokers” according to the home loan provider.

The CEO of mortgage manager Rate Money, Ryan Gair, said that the new loan product was created in response to a “gap in the market” for self-employed workers.

Gair said: “The challenging environment for private dwelling construction continues, with approvals at levels unseen since 2013, due to stringent lending criteria and economic headwinds.”

Indeed, the Australian Bureau of Statistics (ABS) revealed that private house approvals in February reached a decade-low of 8,404. The last time dwelling approvals were this low was in May 2013 when dwelling approvals were 8,374.

Gair continued that the Elevate Construction loan product had been developed in response to record-low dwelling approvals to support borrowers.

He concluded: “We understand the gaps in the market, especially for the self-employed sector, and we’ve tailored our solutions to bridge these gaps.

“With over $7 billion in settlements in just under five years, we pride ourselves on market-leading product innovations across our portfolio, including eliminating clawbacks, application fees, valuation fees and risk fees.

“We are unwavering in our commitment to addressing the unique needs of this often-overlooked demographic.”

Assetline Capital also launched an alt doc construction loan product earlier this year to support investors and developers with construction funding in metro areas.

[Related: Assetline Capital launches new Alt Doc Construction product]