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Your construction finance specialists
As construction lending specialists, we know exactly what’s required to get the job done. We’ll be by your side, to guide through each step of the construction loan journey from start to completion. We’ll also work closely with your builder and other parties involved to ensure that the finance process runs smoothly. At My Property & Finance, we’ve spent many years helping everyday Australians secure finance to build their dream homes – now it’s your turn!
How construction loans work
Construction loans are not like regular home loans, the main difference being that you don’t draw down your funds in one lump sum. Instead, the lender will release funds to you in stages, which tend to follow certain milestones in the building process. There are usually six progress payments stages which include; deposit, base/slab down, frame, lock-up, fit-out and practical completion.
Most lenders will require works to be completed for each stage before any progress payments are made. At certain stages of construction, a valuer will assess the work and then authorise the lender to provide the next progress payment. Once the construction loan is drawn down in full, your loan will generally revert to a standard Principal & Interest repayment loan, unless otherwise arranged with the lender. Then you’ll have the option of choosing between different loan types or features, such as a fixed rate loan.
Finding the right construction loan
Whether you’re building a new home, renovating or extending, My Property & Finance will recommend a finance package to help you reach your construction goals sooner. Of course, our construction loans aren’t just stress-free, easy and convenient – they’re also affordable, with competitive interest rates, low-deposit options and flexible feature to boot. Talk to My Property & Finance today to secure the right construction loan to get your project off the ground faster!
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How we can help you!
Provide expert advice and guidance
We’ll discuss your current financial position, requirements and objectives, so we can gain a thorough understanding of your goals in relation to the construction of your property.
Calculate how much you can borrow
After we’ve collected some paperwork and personal details from you, we’ll calculate your borrowing capacity based on your income, expenses, credit history, current savings, deposit and available equity in your land.
Explain the costs
We’ll explain all the upfront costs, allowing for any application fees, progress payment inspection fees and Lenders Mortgage Insurance (LMI) if you’re borrowing more than 80% of the property value.
Compare lenders and secure a better construction loan
With access to hundreds of loan products available across 35+ leading banks and lenders, we’ll compare the most competitive construction finance options and match you with the loan that best suits your needs.
Get your loan pre-approval
If you’re looking to build or renovate, we’ll organize a pre-approval, so you can be confident knowing how much you can afford to spend on your project.
Handle the paperwork, negotiations and details
We’ll handle all the paperwork and liaise with the lender on your behalf. We’ll also deal with any on-going communication with your builder until your loan is approved and settled.
Break new ground with your Construction loan!
Call My Property & Finance on 1300 672 633, or submit your details and one of our Mortgage Specialists will contact you within 24 hours (Mon - Fri) to chat about your finance options.
Like to stay well-informed?
Construction Loan FAQ's
A construction loan is a type of loan intended for those building or renovating a property rather than purchasing a pre-existing property.
Construction loans aren’t set up in the same way as traditional home loans, in so far as the lender considers the total amount you need pay for the construction loan then breaks down the full amount into separate payments called progress draws. Most lenders will require works to be completed for each stage before any progress payment is made. Whilst progress payments are being made, the majority of lenders may only expect you to pay the interest due on the amount that has been drawn hence providing potential cash flow benefits to you.
After completion the loan generally reverts to a standard Principal & Interest repayment loan. Once the construction loan is draw down completely, you then have the option of choosing between different loan types, including Fixed Rate loans.
Most lenders will only ask you to make interest repayments on the money that has been drawn down (paid to the builder), whilst your building is in progress. This means you’ll only be charged interest on the amount used, not the full approved loan amount. Construction loans can provide potential cash flow benefits to you, because you’re not paying interest on the entire loan amount while you wait for your house to reach completion.
- Deposit – Paid to your builder before construction begins.
- Slab or Base – Payable after the slab is poured or sub-floor being completed.
- Frame – When the walls are established.
- Lock-up – Roof, windows, doors, etc.
- Fit-out or Fixing – Appliances, Interiors like cabinetry & tiling.
- Practical Completion – The home is ‘fine tuned’ blemishes buffed out and handed over to the purchaser.
As a general rule, the amount you pay at the different stages of construction is as follows:
- The deposit: 5%
- The slab or base stage: 15%
- Frame stage: 20%
- Lockup stage: 20%
- Fit-out or fixing stage: 30%
- Practical completion stage: 10%
To apply for a construction loan, you’ll need to provide more documentation in comparison to a traditional mortgage. In addition to the standard documents for a home loan application, you’ll also be required to provide a copy of:
- A “fixed price” building contract with a registered builder.
- The Council approved plans.
- Construction specifications.
- A copy of your builder’s current building insurance.
- For house & land packages, you’ll be required to provide the purchase contract for the block of land.
You must use a Registered Builder who is licenced and insured. Your lender will need to approve your choice of builder.
Depending on the lender, you may have to source the extra funds yourself. It’s important to calculate expenses accurately before starting the project and before applying for your construction loan. If you anticipate exceeding approved funds, contact your My Property & Finance immediately, so we can work out how best to assist you.
The good news is yes. Contrary to popular belief, there are a few lenders that will allow you to fix your home loan before construction commences.
For construction loans, lenders typically allow up to 12 months for your builder to complete the project.
If you’re purchasing a block of land, some lenders allow up to 2 years to complete construction of the dwelling after the purchase of the land has settled.