Construction loans
construction loans

So, you’ve decided to build a new home or renovate an existing one.

You might be in the early stages and still deciding if this is the best option for you, or maybe you’ve already purchased the land or knocked down some internal walls and you’re ready to go right now.

This type of loan works differently to a regular home loan and it's important to understand the process so there are no surprises along the way.

How construction loans work

The lender pays your builder upon completion of each stage, in-line with the builder’s contract.

The number of stages can vary, but there are typically 5 stages used to determine payments.

  • SLAB. Includes concrete slab, footings, pad and base brickwork.
  • FRAME. The house frame is complete and approved.
  • LOCK UP. The windows and doors, roofing, exterior and insulation are all done.
  • FIXING. The kitchen cupboards, appliances, bathroom and toilet are in. Plumbing and electrical are done. The plasterboard is in and the painting is complete.
  • COMPLETION. Fences up. Site tidied.
As the funds are paid to the builder in instalments, most lenders will typically only require you to pay interest on the amount you have drawn. 

I.e if you are given a $700,000 construction loan but only $300,000 has been paid in progress draws, you will only pay interest on that $300,000. This means you actually save money in interest payments throughout the construction. 

Once construction is complete, and all progress draws have been made, you’ll then begin making full principal and interest payments on the loan. 

We’ll help you understand what you need to do and when, which is super important when it comes to construction loans.

You'll get:

Detailed walkthrough of progress draw stages
Borrowing capacity evaluation
Equity review and access strategy
Preliminary borrowing and repayments assessment
Everything you need to do and when checklist
book your assesement now

Our calculators.

Here are some of the most common loan calculators used by people exploring construction loan options.
These might help you too.

Get a health check on your home loan.

You could save thousands of dollars.

Lenders have incentives and deals on offer on the regular, particularly if you’re a new customer (and when interest rates are on the rise).
Find out if you’re on a competitive rate, or if we can secure you a better one and save you thousands of dollars.
You'll find out in just 3 hours