Whether you’re looking at a major renovation, taking a wrecking ball to an existing property, and re-building from scratch, a Construction Loan may meet your needs.

What is it?

A construction home loan gives you the option to pay a licensed builder throughout the process of your renovation in chunks or installments. Known as 'progressive drawdowns’ or ‘progress payments’, this means that rather than paying for the construction all at once in a lump sum, you may pay in installments as your build progresses through the various stages of construction.

A Construction Loan is only available for a property built and kept for personal or residential purposes and not for dwellings that you plan to sell immediately after.

Speak to one of our Brokers to discuss your construction requirements.

How Does it Work?

5 stages of construction:

• Slab: This would be laying the foundation (groundwork, plumbing, piping, waterproofing).
• Frame: Building up the frames and key pillars of the house.
• Lockup: This would be putting up the external walls, windows, and doors
• Fit out: Digging out gutters, any additional plumbing, and electrical wiring.
• Completion: The finishing touches to make the house livable.

An invoice will be issued once each stage is completed. Before paying the builder, your lender performs an inspection to verify that each stage of the construction accordingly.

Home Loan with Construction option and a Standard Home Loan?

A standard home loan charges you interest on the full loan amount from settlement, while a construction loan divides the loan into stages in accordance with the construction progress. A construction loan also offers interest-only repayments during the construction. It will later revert to the standard principal and interest loan once construction is complete.

This means that you’ll only make interest repayments on funds that have been drawn down at that point in the process.