Services · Buying
Construction Home Loans
Building from scratch, or knocking down and rebuilding, works differently to buying an existing home. The loan pays out in stages as the build goes up. Here's how it works and how I keep it smooth.
A construction loan isn't one lump sum. The lender releases the money in chunks, called progress payments, as your builder finishes each stage of the build. You usually only pay interest on what's been drawn so far, which keeps repayments lower while the house is going up.
The usual progress payment stages
- Deposit to the builder to get started.
- Base or slab stage, once the foundation is down.
- Frame stage, when the skeleton of the house is up.
- Lock-up, when the walls, windows and doors are in.
- Fit-out or fixing, for the internal work.
- Completion, the final payment when it's finished and handed over.
Budget for the gap
During the build you're often paying rent and loan interest at the same time. I'll factor that into what you can comfortably borrow so it doesn't catch you out.
Where I help
Construction lending has more moving parts: fixed-price building contracts, council approvals, valuations at each stage, and lenders who each handle it a bit differently. I match you to a lender that's comfortable with your builder and your plans, then keep the progress payments flowing so your build never stalls waiting on the bank. If you already own the land, we can often use that equity too. Have a look at how equity works once you're further along.
Frequently asked questions
How much deposit do I need for a construction loan?
It varies, but many buyers build with a similar deposit to buying an established home. The lender values the land plus the fixed-price build and lends against that. Book a call and I'll run your numbers.
Do I pay full repayments during construction?
Usually not. Most construction loans are interest only during the build, and you only pay interest on the funds drawn so far, so repayments step up as the build progresses. They move to normal principal and interest once it's finished.
What if the build goes over budget?
It happens, so it pays to keep a buffer. If you need more funds mid-build there are options, but they take time, which is why I like to build a contingency into the plan from the start.
Important information
This information is general in nature and does not take your personal objectives, financial situation, or needs into account. It is not credit assistance or a recommendation to enter into any particular credit contract. Consider whether it is right for you and seek advice before acting. Lending is subject to a lender's eligibility and approval criteria. Terms, conditions, fees, and charges apply.
Greenwood Finance · ABN 23 671 049 693 · Credit Representative No. 551942.
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