Finance your new build or major renovation with a flexible construction loan — we guide you through every stage from slab to completion.
A construction loan is a specific type of home loan designed to fund the building of a new home. Unlike a standard home loan — which applies to existing properties — a construction loan works in conjunction with the building process and releases funds progressively as your build advances.
During construction, you only pay interest on the funds drawn down at each stage, keeping your repayments lower throughout the build. Once complete, the loan reverts to a standard principal and interest loan — known as the "end loan."
If you're building without a licensed builder, some lenders offer owner builder construction loans — though they're more conservative. Without a building licence, lenders may only offer up to 60% of the end market value, requiring a 40% deposit. If you have no construction experience, engaging a professional builder is strongly recommended.
Construction loans can carry slightly higher interest rates than standard home loans. This is because it's harder for a lender to value a home that doesn't yet exist — which adds risk. To compensate, lenders may apply a higher rate during the construction period.
Beyond the rate, construction loans can also involve additional fees including:
Interest-only repayments during the construction period keep your costs lower while your home is being built, before switching to principal & interest at completion.
You can make additional payments into your construction loan at any time, reducing your balance and the amount of interest you'll pay over the life of the loan.
Funds are released in progress payments aligned to your build stages — typically 5 to 6 payments — so you only pay interest on what's been drawn down, not the full loan amount.
Construction loans are available for homes built and kept for personal use or investment. They're not available for properties you intend to sell immediately upon completion.
Your builder submits an invoice after each stage. Once you approve the work, your broker arranges payment directly to the builder — keeping the process smooth and transparent.
Construction must commence within a set period from your loan disclosure date and be completed within 24 months. A final inspection is conducted before the last payment is released.
The construction process is divided into five stages. At the completion of each, your builder submits an invoice which is reviewed and paid — your loan is drawn down progressively, so you only pay interest on funds already released.
The concrete slab that forms the foundation of your home is measured and poured. Once cured, builders connect the plumbing and stormwater drains beneath the slab.
The structural skeleton of your home is erected. This takes roughly one day for a single-storey home and two to five days for a double-storey build.
External walls, roofing, windows and doors are installed. At this stage your home can be "locked up" — protecting the interior from the elements.
Internal fixtures are installed including plumbing, electrical fittings, cabinetry, benchtops and internal doors. Your home starts to take its final shape.
Final plumbing and electrical connections are completed, painting and detailing finished, and the site is cleaned up. A final lender inspection takes place before the last payment is released.
Before applying, your building plans need council approval. Here's what the process looks like from there.
Your builder or architect lodges plans with your local council. Once approved, the permit is submitted to your lender along with your application documents.
Just like a standard mortgage, your lender assesses your credit score, income, expenses and existing debts to confirm you can comfortably service the loan.
A property appraiser estimates the completed value of your home including land. Further valuations take place at each stage of the build. Include all out-of-contract items in your quote.
If approved, you receive a loan offer. Construction begins and progress payments are released at each completed stage until your home is finished.
Construction loans are complex — but they don't have to be stressful. We handle the paperwork, compare the lenders and guide you from the first brick to the final handover.