Construction Loans

What Is a Construction Loan
A Construction Loan is for borrowers wanting to build a new home. Some construction loans allow you to use the mortgage loan to purchase the land first and then construct a residence on it within the given timeframe (normally 2 years).

Mortgages are also available for purchasing the land only. This will allow you to purchase just the block of land, without having a building contract or council approved plans.

Construction Loans allow for an interest only mortgage repayment option during the construction process (with up to 2 years finance of the land before construction), and principal and interest mortgage repayments after construction has completed.

How A Construction Loan Works
The funds available for construction will be drawn down via progress payments which will be paid directly to your builder.

This way you are only charged interest on the funds used, therefore reducing the amount of interest charged.

In the initial stages of construction, you will first be required to contribute your own funds towards the construction cost

(unless the total cost of construction is funded by us). The funds in your loan will then be used to complete the project.

Note, if you’re eligible for the First Home Owner Grant, the grant is only accessible once the slab has been completed.

There are five drawdowns for a Construction Loan. These are generally:

  • Slab down - 15% of total construction cost
  • Frame up - 25% of total construction cost
  • External brick work completed - 20% of total construction cost
  • Lock up stage - 20% of total construction cost
  • Practical completion - 20% of total construction cost

Please note that these may vary depending on your builder and your building contract.