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.

For the application and the finalisation of your construction loan, you’ll need Council-approved plans, a signed and dated building contract, a quantity surveyor report, builder risk insurance, and a copy of the builder’s public liability insurance.

With the completion of each stage of your renovation or build, we’ll arrange an inspection of the property and then pay the builder directly for the completed work. Each progress payment is called a drawdown.

The number of drawdowns will depend on the agreement between you, your builders, and your lender. Loan repayments in constructions loan are interest-only but once the entire renovation is completed, the construction loan will revert to principal & interest repayments, unless you request to extend the interest-only period.

When applying for the First Home Owner Grant, you need to:

  • Check your eligibility.
  • Collect the required documents.
  • Complete your application online or lodge the application through an approved representative.

The First Home Owner Grant is typically provided after laying the slab for construction loans.

You could get a construction loan as an owner-builder, but the funds are still released during the stages of construction.

Building delays may affect when the builder gets paid but not the loan itself. If there is a delay during the frame-up stage, for example, the payment to the builder will also be delayed.

When construction is complete, your construction loan will become a standard home loan. You’ll begin paying off the principal loan amount plus interest until the loan term is finished.

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.

While the house is under construction, you’ll make interest-only payments on the amount paid to the builder. When the house is completely built, your construction loan becomes a standard home loan.

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.

There are typically five stages of building a house with a construction loan. We will finance the construction at each stage. Stages may differ from state to state, but the most common building stages are foundation, framing and brickwork, lockup, second fix, and completion.

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.

Every house is different, but one thing is for sure, building a new home is exciting. Before you start, it’s important to know how much it will cost so you know how much to borrow. Various guidelines exist to help you ask the right questions and calculate a construction budget.

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