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Finance for the home you're building.

New builds, knockdown rebuilds and major renovations are financed differently from a standard purchase. Progress draws, fixed-price contracts, valuations and interest-only repayments during construction all need coordinating so the build keeps moving.

How a construction loan works.

A construction loan is usually split into two phases. During construction, you draw down progressively as each building stage completes. The stages are typically deposit, base, frame, lock-up, fixing and completion. You pay interest only on the amount drawn so far, which keeps cashflow manageable before the full loan is advanced. Once the build finishes, the loan rolls into a standard principal and interest product on the full balance.

This page sits under home loans. If your build is a small-scale development, such as a duplex or three-townhouse project, you may need development finance instead, where the lender, LVR and documentation are different. We'll tell you which side of that line your project falls on.

What we map for a construction deal.

Land + construction split
Whether you're buying the land separately or simultaneously, and how the loan is staged around that.
Fixed vs cost-plus contracts
Most lenders require a fixed-price HIA/MBA contract. Cost-plus builds can work but need the right lender.
Draw schedule
How many stages the loan releases, and what documentation each draw requires from the builder.
Valuation handling
How the 'as-if-complete' valuation is managed. This is often where construction deals fall over.

Construction FAQs

How long can I stay interest-only during construction?
Typically 12 months, extendable to 24 for larger builds if the lender agrees upfront. Past that, the loan reverts to P&I whether or not the build is finished, which is why the timeline matters.
Can I be an owner-builder?
Yes, but lender appetite drops sharply. Most lenders cap owner-builder loans at lower LVRs and require extra documentation. We'll tell you which lenders will look at it.
What happens if the build goes over budget?
You'll need to cover the overrun from savings, equity release or a loan top-up. We build a contingency buffer into the initial structure so a 5 to 10% overrun doesn't derail the loan.

Related pages

Development financeNext home buyersPre-approval
General advice disclaimer. The information on this page is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether it is appropriate for you before acting on it, and seek professional advice where relevant.

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