One of the major necessities of man is shelter. And at a point, people dream of owning a house. Although, dreams are realizable, not every person has the capacity to build a house. However, it can be made easy for many.

This article brings to you how you can build a house using a construction loan. But firstly, what is a construction loan?

What Is a Construction?

A construction loan, also called a self-build loan, is a short-term loan used to finance the building of a home and other real estate project. It is short term because it is usually for less than one year.

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How Does a Construction Loan Work?

Obtaining a construction loan is like buying an existing house. Once you have decided to build a house on a construction loan, you can meet with the lender to get pre-approved for the amount you can afford.

Then, the construction loan is in two parts. The first part is for a brief period. Where you must pay just the interest for the building of the house. This loan is made easy for anyone who wants to build because the payment is divided into smaller units known as draws.

Also, at the completion of the house, the loan will change into a permanent mortgage loan.

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Recommendation

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4. Building estimator tools to use in Nigeria
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