Construction loans Australian families can build on with confidence
Building a new home involves a land purchase, a building contract and a series of progress payments. We set up finance that pays your builder at each stage while you only pay interest on what has been drawn.
- Progress payments managed
- House-and-land packages
- Grant eligibility checked
Construction loans in Australia: how staged funding works
A construction loan works differently from a standard home loan. Rather than paying the full amount at settlement, the lender releases money in stages as your home is built, usually after an inspection or an invoice from your builder. You generally pay interest only on the amount drawn so far, which keeps repayments lower during the build. Once construction is finished, the loan typically converts to normal repayments. New estates and house-and-land developments around Australia commonly use this type of finance. We work with people building right across Australia, by phone, email or Google Meet.
Most builds follow a standard set of progress payments: a deposit, then stages for the slab or base, frame, lock-up, fixing and practical completion. Lenders generally want a fixed-price building contract with a registered builder, council-approved plans and specifications, and evidence of builder's insurance. If you are buying a house-and-land package, the land may settle first and the build loan starts later, or both may sit under one contract. We explain how your package is structured before you sign so there are no gaps in funding.
New homes can come with extra support, although each state and territory has its own rules. In Victoria, for example, the First Home Owner Grant is available for eligible first home buyers building or buying a new home, and stamp duty is usually payable only on the land value in a separate land and build arrangement. The Australian Government 5% Deposit Scheme may also apply. Rules and caps change, so we check the current criteria with you. Owner-builders face a much smaller pool of lenders and stricter conditions, so talk to us early. First home buyers should also read our first home loans page.
Buy with a 2%–5% deposit
Eligible first home buyers can buy with 5% down, and eligible single parents with 2%, with no lenders mortgage insurance under the Australian Government 5% Deposit Scheme. Price caps apply.
Why build with our help
Stage-by-stage clarity
We explain how much each progress payment will be, when it is due and what your repayments will look like at every stage, so there are no cash-flow surprises.
Contract checks before you sign
We review whether your building contract, variations and specifications meet lender requirements, which helps you avoid funding shortfalls part-way through the build.
Land and build coordinated
For house-and-land packages, we line up land settlement and the construction loan so funds are ready when your builder needs them to start.
Grants and schemes reviewed
We check whether a first home owner grant, stamp duty savings or the Australian Government 5% Deposit Scheme may apply to your build under current rules.
Faster progress claims
When your builder issues a claim, we help you get it approved and paid promptly, keeping the build on schedule and your builder happy.
Buffer for variations
We encourage you to allow for site costs, upgrades and variations, and we structure the loan so you are not caught short at the fixing stage.
Who we help build
Every situation is different. If yours isn't listed, ask us anyway. Chances are we've seen it before.
Check my optionsFrom land to keys
Budget the whole project
We estimate the land price, build contract, site costs, stamp duty on the land and a buffer for variations, then confirm what you can comfortably borrow.
Pre-approval and land
We secure pre-approval, then finance the land purchase so it can settle, whether it is a titled block or land in a new estate awaiting title.
Build contract approval
We submit your fixed-price contract, plans and specifications to the lender, arrange the on-completion valuation and obtain formal approval for the construction loan.
Progress payments
As your builder completes the slab, frame, lock-up and fixing stages, we help you authorise each claim so the lender releases payments on time.
Completion and handover
After practical completion and final inspection, the last payment is released and your loan moves to regular repayments. We then review it for ongoing value.
What to prepare for a construction loan
Having these ready speeds everything up. Don't worry if something's missing; we'll tell you exactly what each lender needs.
Run the numbers first- Signed fixed-price building contract
- Council-approved plans and specifications
- Builder's licence and domestic building insurance certificate
- Land contract of sale or title details
- A schedule of progress payments from your builder
- Quotes for items outside the contract, such as landscaping
- Recent payslips or tax returns
- Savings statements showing your contribution
- Photo ID for each borrower
Construction Loans: your questions answered
How do progress payments work on a construction loan?
Your building contract sets out stages, usually a deposit, base or slab, frame, lock-up, fixing and completion. When your builder finishes a stage, they send an invoice. You sign an authority, the lender may inspect the work, and then it pays the builder directly. Interest is charged only on the amount drawn so far, so your repayments increase gradually as more of the loan is used.
Do I need a fixed-price building contract?
Most mainstream lenders prefer, and often require, a fixed-price contract with a registered builder. It gives them confidence about the final cost and the value of the finished home. Cost-plus contracts, where the price can move, are harder to finance and usually need a larger buffer. If your contract includes provisional sums or allowances, we check how the lender will treat them before you sign.
Can I get the First Home Owner Grant if I build?
First home owner grants are run by each state and territory, and each has its own amounts, value limits and conditions, such as a requirement to live in the home. In Victoria, for example, the grant is aimed at eligible first home buyers who build or buy a new home, and it is often paid at the first progress payment when you build. Rules and amounts change, so we check the current criteria with you and help lodge the application through the lender where possible.
What happens if my build goes over budget?
Lenders usually require you to pay for cost overruns and variations yourself before they release further funds, because the loan is based on the approved contract price. If you cannot cover the shortfall, the build may stall. That is why we recommend including a buffer and confirming site costs early. In some cases a loan increase is possible, but it needs a fresh assessment and valuation.
Can owner-builders get a construction loan?
It is possible, but the choice of lenders is much narrower. Lenders see owner-builder projects as higher risk, so they often ask for a larger deposit, detailed costings, relevant experience and the necessary owner-builder permits. Progress payments may be released only after work is completed and inspected. If you plan to be an owner-builder, speak with us before buying land so we can check what is realistic.
How is a house-and-land package financed?
It depends on the contract. In a split contract, you buy the land and sign a separate building contract, so the land usually settles first and construction draws follow. In a single contract, you may pay a deposit and settle on completion. Split contracts can reduce stamp duty because duty is often assessed mainly on the land. We read the package terms and structure the finance to match.
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