Construction Loans
A home loan structured around your construction plans, whether you’re building or renovating.
- No ongoing fees
- Online in Australia since 2011
No ongoing fees
Online in Australia since 2011
Construction loans from
- Borrow up to 90% LVR
- Interest only during construction period
- Offset sub-account available after completion
Fees
Application fee
$0
Ongoing fees
$0
Security assessment fee
From $230 (metro, under $1M)##
Government fees
At cost
Settlement fee
$300
Construction admin fee
$120
Construction assessment progress fee
$650
How your construction loan works?
A construction home loan works quite differently from a standard home loan.
A standard home loan releases the full amount at settlement to purchase an existing property, while a construction loan releases funds progressively as your builder completes each stage. This means you only pay interest on what’s been used at any point in time.
As each stage of construction is completed, we’ll arrange a progress inspection of the works completed. This progress inspection confirms each stage of the build is completed as contracted before we release the funds to your builder for each stage.
If you’re knocking down and rebuilding, or renovating, there’s no land settlement component because you already own the property. Your loan starts drawing down from the very first construction payment - whether that's demolition costs for a knockdown rebuild, or your builder's initial deposit for a renovation or extension.
Progressive draw-down process
Your initial payment to builder, includes payment for council approved plans and building permit.
The land is prepared, foundation is laid. This is when we start the drawdown process.
Completion and approval of house frame.
Completion of external walls, windows, external doors and roofing so that the property is lockable.
Completion of internal fit-out, including fixtures, fittings, electrical work, plumbing, internal walls
(10 - 15%)
Remaining work completed, inspections passed, and property ready for handover. Final payment made to your builder.
Three things that set a construction loan apart from a regular home loan
Progressive draw-downs, not a lump sum
Your loan is released in up to 6 stages as your builder reaches each milestone. You’re not borrowing the full amount on day one, which means you’re not paying interest on the full amount from the get-go either.Interest-only on drawn funds
During construction, you'll make monthly interest-only repayments, only on the amount that has been released to your builder.Conversion to a standard home loan upon completion
When your builder reaches practical completion and a final payment is made, your Construction Loan automatically converts to a standard variable home loan. No refinancing, no new application and no break cost. If approved during your initial loan application, you have the choice to remain on interest-only repayments for the remainder of your interest-only term. Alternatively, you can also opt for principal & interest repayments.Why choose our construction loan?
Building a home comes with a few extra moving parts. Our construction loan is designed to help keep repayments manageable while you build and give you expert support from start to finish.
Interest-only during the build
Only pay interest on what’s been drawn, keeping repayments low throughout construction.
Direct draw-down releases
Progress payments released directly to your builder after invoice and inspection sign-off to keep the process running smoothly.
No monthly or ongoing fees
No monthly administration charges, accounting-keeping fees, or redraw transaction fees once your loan converts post-construction.
Real-time tracking via onTrack
Monitor your loan application and document uploads 24/7 through our onTrack portal available on mobile.
Multiple award-winning home loan products
Australian Credit Licence: ACL 395219
Your build. Our team.
From settlement to handover
When you take out a construction loan with loans.com.au, you’re assigned to our dedicated construction lending team - specialists who know the build process inside out, and stay with your from your first draw-down to your final inspection.
One team, the whole way through
From settlement day, you’re looked after by our construction lending team. Your builder hears from us too - we send a welcome letter at settlement to both you and your builder so everyone knows who to call.
Specialists, not generalists
Our construction lending team is well-versed in construction lending, drawdown payment management, and coordinating with your builder.
Progress payments that don’t hold up your build
Construction draw-downs are processed as a priority by our dedicated team. When your builder hits a milestone and invoices, we move quickly because we know a delayed payment means a delayed build.
Supporting you from slab to settlement
Our team keeps you across your loan status, upcoming draw-down milestones, and anything that needs your attention. You'll hear from us at the right moments.
Your dedicated construction team manages every stage of your loan, so you can focus on the build.
Free guides & reports
Create a property report
Get a list of the similar property sales in the area.
Get a list of properties currently on the market, similar to the one you are looking at.
Get an estimation of the value of the property.
Your guide to Construction
Your step-by-step guide to construction loans with loans.com.au so you can build your home your way. We can help you get your finance sorted so you can build your home, or complete your renovations.
Construction loans
A construction loan is for anyone building or renovating a home, instead of buying an established property. They offer cashflow flexibility since they let you progressively drawdown money throughout the construction process, ensuring you only pay interest on the amount you use.
Yes. Whether it's a small property extension or a total knock-down and rebuild, a construction loan lets you draw funds from the loan progressively as your invoices arrive. This ensures you save money, as you only pay interest on the progress payments made until the loan is fully drawn.
To apply for this loan, you’ll need to have:
- Finalised the purchase of your land
- Selected a licensed Master Builder
- Building plans
- Copy of the fixed HIA/MBA Building contract
Before construction begins, your builder will prepare a contract outlining each construction stage and associated costs. We then progressively drawdown your loan to pay the builders' costs at each stage. Generally, your construction loan will be interest-only repayments while your home is being built.
The 6 construction stages are:
- Deposit
- Slab down
- Frame up complete
- Lock-up
- Fixing
- Practical completion
A progress inspection will be carried out by an independent valuer for each building stage. Once your builder sends the invoice to us, a progress inspection will be ordered.
An offset sub-account isn't available on your construction loan but is after the construction loan ends.
An offset sub-account is linked to your home loan and helps reduce the interest you pay. Instead of earning interest like a regular savings account, the balance in your offset reduces the portion of your loan that accrues interest. This can help you pay off your loan faster and save on interest costs.
Key things to know:
- It's a sub-account of your loan, not a separate deposit account.
- Funds in the offset sub-account are not covered by the government deposit guarantee.
- The offset cannot exceed your home loan balance.
If you have any questions, our friendly team is here to help!
How our construction application process works
From your first call to settlement, here’s a guided process with an Australian-based team at every step.
Apply Online
Complete your application through our online platform.
Upload & Track
Submit your documents and monitor your application in real time via our onTrack portal.
Speak to our Specialist
Our lending specialists will guide you through the process and help secure your pre-approval.
Approval & Signing
Review and sign your mortgage documents securely via onTrack.
Settlement
We'll guide you through the drawdown process for your construction loan, with progress payments made to your builder at each stage of construction.
Manage Your Loan
You'll receive your login details to manage your repayments and account details via our Smart Money app.
Kathryn
Lending specialist
Real people, real construction wins
How loans.com.au customers have used construction loans to build their dream homes.
Customer reviews
Our Google Rating
Meet the team behind Australia’s Home of Loans
We have been making it easier for Aussies to access great value home and car loans with our award-winning rates, fast approval and seamless digital experience.
Buying a fixer upper
If you are struggling to afford the high price of a property in Australia’s capital cities, it can be tempting to save money up front by purchasing a “fixer-upper”.
Building vs buying a house: which is better?
Is it cheaper to build or buy? This guide compares median home prices, build costs, and land prices across Australia, plus key pros and cons to help you choose the best path to homeownership.
Stages of house construction
Stages may differ from lender to lender, but these are the common stages of building a house.
Should I Buy a House Now or Wait?
How hard is it to get a mortgage in Australia?
Can You Use a Bridging Loan for Renovations?
