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Construction Home Loans

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Build or renovate with confidence

If you’re planning to build a new home or take on major renovations, a construction home loan works differently to a standard mortgage. Instead of receiving the full loan upfront, funds are released in progress payments aligned with key building stages — so you only pay interest on what you’ve drawn, helping to manage cash flow throughout your build.

Because construction loans are more detailed, lenders require documents such as a fixed-price building contract, council-approved plans, and progress payment schedules. Once the build is complete, the loan generally converts into a standard home loan, so it’s important to set it up correctly from the start.

At My Finance Consultants, we compare lenders, prepare your application, coordinate progress payments, and help structure your loan to support both your build phase and long-term finance goals.

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How construction loans work

A construction loan usually involves two lending components:

  1. The land loan (if purchasing vacant land)

  2. The construction loan, released in draws as the build progresses

Most lenders require construction to start within 6 months of approval and be completed within 24 months.

During the build, many lenders allow interest-only repayments to help manage cash flow, then convert your loan to principal & interest once construction is complete.

Quick tool:
Estimate repayments → Mortgage Repayment Calculator (/mortgage-repayment-calculator)

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Progress payment stages

Construction loans are paid in stages to your builder as each milestone is completed:

StageTypical %What HappensBase~15%Site prep, foundation, slabFrame~20%Framing, roofing structure, structural worksLock-Up~20%External walls, doors, windows securedFit-Out (Fixing)~30%Internal linings, joinery, electrical & plumbing fit-outCompletion~10%Final finishes, painting, clean & handover

Interest is only charged on the amount drawn at each stage, not the full loan from day one.

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Documentation lenders require

To approve and fund your construction loan, lenders will request:

  • Fixed-price building contract

  • Council-approved plans

  • Detailed progress payment schedule

  • Builder’s insurance documents

  • Updated valuation reports as the build progresses

Any major changes to plans or contract amounts may require lender reassessment, so finalise your documentation before submission.

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Additional works to consider

Most fixed-price contracts exclude items such as:

  • Driveways & landscaping

  • Fencing & external structures

  • Pools, sheds or verandahs

These may require separate quotes or additional funds, so we help you plan total project funding from the start.

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Common challenges (and how we help)

  • Builder requires early deposit before lender releases funds

  • Variations to plans after approval

  • Timing or weather delays impacting valuation stages

  • Subcontractor work not included in contract

We guide you on document sequencing, builder drawdown requests, valuation timing, and lender communication — preventing costly delays.

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Owner-builder & investment construction

Construction loans are also available for:

  • Owner-builders (with stricter requirements)

  • Investors constructing for rental yield or capital growth

We help assess suitability, risks, lender policy differences, and cost/time implications before you commit.

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When construction is complete

Your lender will arrange a final inspection to confirm the build aligns with plans and valuation expectations. Once approved, your construction loan converts into a standard home loan.

This is the perfect time to:

  • Review loan structure

  • Add offset accounts

  • Adjust repayment frequency

  • Consider debt reduction strategies

We manage this transition so your long-term finance strategy is set.

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FAQs

H3 Do I need to purchase land first?
Yes — the land is financed first, then construction is approved once your build documents are finalised.

H3 Can I use different lenders for land and construction?
No — both must be with the same lender, unless another property’s equity is used.

H3 Are there extra fees?
Expect additional valuations and progress payment administration fees. We outline all costs upfront.

H3 Can I get a construction loan as an owner-builder?
Yes — but only with select lenders, and additional criteria apply.

H3 What happens after construction is finished?
Your loan switches to a standard home loan. We help ensure it’s structured correctly.

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Ready to start your build?

We compare over 40 lenders and work directly with your builder and lender to keep your project running smoothly.

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  • Apply Online Now

  • Book Your Consultation