Reserve Bank relaxes 80% cap on lending

We are now able to get more than 80% lending against properties being constructed.

What is classed as construction lending? For the purpose of the exemption, this means all residential mortgage lending that is to finance the construction of a new residential property.

The Reserve Bank expects that the construction loan would be for a property where the borrower has made a financial and legal commitment to buy.  This would be in the form of a purchase contract with the builder, and made prior to the property being built. This could be traditional 'construction lending' where the loan is disbursed in staged payments, or it could be a loan to finance the purchase of a property, which will be settled (in one payment) once the build is complete.

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