With progressive drawdown, you only pay interest on the funds you've actually used — keeping your repayments lower while your home takes shape.
Deposits from 5% · Progressive drawdown · Interest-only during build
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A construction loan is a specialised home loan designed for building a new property rather than purchasing an existing one. The key difference from a standard home loan is how the funds are released.
Instead of receiving the full loan amount at settlement, a construction loan uses progressive drawdown — funds are released in stages as your build progresses. Your builder completes a stage, invoices you, and the lender releases payment after confirming the work is done.
The major advantage? Interest is calculated only on the amount drawn so far, not the full loan. This means your repayments start small and gradually increase as more funds are released — giving you significant breathing room during the construction period.
Your construction loan is released in stages that align with the building process. At each milestone, your builder invoices you, you request a drawdown, the lender may inspect the work, and funds are released directly to your builder.
Foundation preparation and concrete slab poured. This is the first drawdown after your deposit, covering site preparation, excavation, and the base structure your home will be built upon.
Timber or steel framing is erected, giving your home its shape. This stage includes the structural skeleton of walls, roof trusses, and floor framing for upper levels.
The roof is installed, external walls are clad, and windows and external doors are fitted. Your home is now weather-tight and secure — "locked up" from the elements.
Internal works begin — plumbing, electrical wiring, internal walls and plastering, cabinetry, benchtops, tiling, and flooring. Your home starts to look like a home.
Final touches are completed — painting, fixtures, landscaping, driveway, fencing, and final cleaning. A completion inspection is done, and you receive the keys to your new home.
At each stage: Builder invoices you → You request drawdown → Lender inspection → Funds released. You only pay interest on the amount drawn so far.
During the build phase, interest is charged only on the amount released so far — not the full loan. This keeps your repayments lower while construction is underway.
Unlike buying an existing property, building lets you design the layout, finishes, and features that suit your lifestyle — from floor plans to fixtures.
Construction loans are available for new home builds, knockdown-rebuilds, house and land packages, and major structural renovations.
Building a new home may qualify you for the First Home Owner Grant and stamp duty concessions — reducing your upfront costs significantly.
Access features like offset accounts, redraw facilities, and the choice of variable or fixed rates — both during and after construction.
Once your build is complete and you've moved in, the construction loan automatically converts to a standard principal and interest home loan.
Here's an example showing how progressive drawdown affects your repayments during the build phase versus after completion:
Example based on 6.0% p.a. variable rate. Your rate may differ. Your full financial situation would need to be reviewed prior to acceptance of any offer or product.
Construction loans require more documentation than standard home loans. Here's what to prepare based on your project type:
Construction loans can be structured to suit a range of building scenarios. Here are the most common project types:
Building on vacant land with a registered builder. This is the most straightforward construction loan type, using the standard 5-stage progressive drawdown process. You purchase or already own the land, engage a builder, and fund the construction through staged payments.
A combined purchase where a developer sells the land and build contract together — often as a single or linked transaction. This can simplify the loan process and may offer pricing advantages. The land settles first, then construction begins with progressive drawdown.
Demolish an existing dwelling and build new on the same site. This may require additional funding for demolition costs. It's a popular option when you love the location but the home no longer suits your needs.
Structural changes, extensions, or complete gutting and refitting of an existing property. To qualify as a construction loan, the renovation must significantly change the property's value — typically involving works of $100,000 or more.
Building yourself without engaging a licensed builder as the principal contractor. Owner-builder loans have stricter requirements — many lenders limit the LVR to 60–70% and require evidence of building experience or a qualified project manager overseeing the work.
Plan your entire build - land costs, construction contract, variations, and see your repayments at every drawdown stage.
This calculator provides estimates only. Speak to a broker for personalised advice.
Find out your estimated borrowing power in under 2 minutes — powered by real lender criteria from our panel of 30+ lenders.
Construction loans are more complex than standard home loans — but that's exactly where we add value. Here's how we support you from pre-approval through to handover:
Not all lenders handle construction loans well. We know which ones have fast drawdown processes and construction-friendly policies.
Construction loans need more documentation than standard loans. We prepare everything to avoid delays at application and at each drawdown stage.
At each build stage, we coordinate with your lender to release funds quickly so your builder stays on schedule and your project keeps moving.
After handover, we ensure your loan converts smoothly to the right home loan product for your ongoing needs — whether that's variable, fixed, or split.
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