Construction Loans

A construction loan is different from a standard home loan. Instead of receiving the full amount at settlement, the lender releases funds in progress payments as your builder completes each stage — typically the slab or base, frame, lock-up, fixing and practical completion. You pay interest only on the funds drawn to date, which keeps repayments manageable while you're also paying rent or an existing mortgage. Once the final payment is made the loan usually converts to a standard principal-and-interest home loan. Construction loans suit new builds, knock-down rebuilds, house-and-land packages and major structural renovations.

Lenders assess construction loans on more than your income. They'll want a fixed-price building contract from a licensed builder (QBCC-licensed in Queensland), council-approved plans and specifications, and a valuation on an 'as-if-complete' basis that supports the land value plus the build cost. Owner-builder projects are accepted by far fewer lenders and at lower LVRs. Most lenders expect construction to start within a set period after approval and be completed within around 12 months, so timing your application against your builder's schedule genuinely matters.

The common traps are around variations and cash. Any changes to the contract after approval — upgrades, site costs, landscaping, driveways or fencing that aren't in the builder's scope — generally need to be funded by you, because the lender lends against the original contract. Land settlement and construction approval also need to line up, particularly with house-and-land packages where the developer's timing dictates the land settlement date. We help you allow for these before you sign, coordinate with your builder and conveyancer, and manage each progress claim so the builder is paid on time and the build stays on track.