Construction Loans

Are you building or renovating?


A construction loan - also known as a building loan - allows you to draw down funds as you go. This reduces the amount of interest you pay and helps to manage your cash flow. 

It also means more flexibility as you bring your perfect dream home to life.

What is a construction loan?

Designed to finance new builds and major renovations


A construction home loan, also called a building loan, is a type of home loan designed for borrowers who are building a home or doing major renovations, as opposed to buying an established property.


Construction or building loans typically have a different loan structure to home loans, the most notable being that funds are released in stages, rather than as one lump sum. You also generally only pay interest on the amount that is drawn down, as opposed to the total approved amount.

A number of lenders offer construction loans that are interest-only during the construction period and then revert to a standard principal and interest loan.

How does a construction loan work?

Construction loans are paid out in stages as your builder progressively completes the building process. Until the loan is fully drawn down, your repayments are usually interest-only which can help with cash flow.


Funds drawn in stages

Funds are paid in stages agreed with the bank and builder


Interest paid on balance

You only pay interest on the drawn down balance


New builds and large renos

Smaller projects may not qualify for a construction loan

How are construction loan progress payments made?

There are usually five stages of construction

​The five stages of building construction are typically known as slab, frame, lock-up, fixing and completion. As each stage is completed, your builder will issue an invoice.​ You will pass these invoices to us and we will submit them to your lender. he lender will then authorise the progress payments from your home loan to your builder. 


​As each progress payment is made, you will only need to pay the interest on your loan balance until construction is finished. Making lower repayments during the construction period means you may have more flexibility and handy cash up your sleeve for unexpected costs.

When construction is complete, you will start to make repayments on both the principal (loan balance) and interest. In some instances, you may be able to continue with interest-only repayments for up to five years.

What about commercial construction?

Commercial, industrial or retail construction


A commercial construction loan is usually for funding to build or improve commercial, industrial and retail premises.


We can arrange new construction loans from as little as $150,000 for the first-time commercial property builder, up to $10 million or more for large scale commercial construction.

Talk with a loan specialist today

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