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Construction
Loans
A construction loan is ideal if you’re planning to build a home, begin a project on vacant land, or complete major renovations. Instead of getting the full loan amount at once, the lender will release funds in stages as each part of the build is completed. Our loan brokers will walk you through the progress payment schedule, help you choose the right loan structure and support you from application to settlement.
Construction Loans
What You Need to Apply
Before applying for a construction loan, you’ll need a licensed builder and a fixed-price building contract that includes a structured progress payment schedule. This schedule must follow your State or Territory’s guidelines. Most building and renovation projects also require council approval.
Lending For Building
About Construction Loans
A construction loan is similar to a regular home loan, but the money is released in stages as your builder finishes each part of the project. You don’t receive the full amount upfront, the lender pays your builder directly as the home progresses. This structure allows for checks along the way, ensuring each stage is completed before the next payment is made.
Construction Loans
FAQs
Answers to the most common questions about construction loans.
How do progress payments work in a construction loan?
Progress payments are released in stages as the builder completes each phase of the build. Common stages include slab, frame, lock-up, fit-out and completion. You only pay interest on the amount that’s been drawn down, not the entire loan.
Do I need a fixed-price building contract?
Yes, most lenders require a fixed-price contract before they’ll approve a construction loan. This contract outlines the total cost of the build and the progress payment schedule, helping them assess the project and manage risk.
Can I make changes to the build after the loan is approved?
You can, but changes may affect your loan. Variations to the building contract often require lender approval, especially if the cost increases or the scope changes. It’s best to finalise your plans before applying.
What documents do I need for a construction loan?
You will need a fixed-price building contract, detailed building plans, council approval (where required), insurance certificates and your normal home loan documents—such as payslips, bank statements and ID. Your Melbourne loan broker can help gather everything the lender needs.