A construction loan works differently to a normal home loan. Money is released against your building contract as work is completed, not handed over all at once. Getting the setup wrong can genuinely stall your build.
Construction loans release money in stages: slab, frame, lock-up, fit-out, and completion. This usually happens after a valuer confirms each stage is finished. You’re generally only charged interest on the money released so far, not the full loan amount.
This means the loan setup needs to closely match your build contract. If there’s a gap between what your builder invoices and what the lender releases, it can become a cash flow problem — unless you plan for it upfront.
Money is released for each finished stage, checked by a valuer, instead of being paid out all at once.
You’re usually only charged interest on the money released so far, which keeps repayments lower while your home is being built.
Fixed-price and cost-plus contracts carry very different risks — worth understanding before you sign anything.
Which loan applies depends on whether you already own the land, and how your building contract is set up.
Lenders look much more closely at owner-builder projects, because of the extra risk. It’s worth discussing this early, rather than assuming standard terms will apply.
This finances the land purchase and the build together, set up so both stages are covered from the start.
This is staged finance for a major renovation or extension, rather than a full new build.
Finance for non-standard builds, where the contract and valuation process can be more involved than a standard project home.
Construction finance depends entirely on the detail in the contract — the drawdown schedule, provisional sums, and variation clauses. Nathan’s nursing background means checking every detail carefully isn’t treated as a hassle. It’s the job — the same way a chart needed to be right the first time, every time.
A few things worth understanding before you commit.
Your builder sends an invoice at each stage. A valuer confirms the work is done. The lender then releases the matching funds directly to the builder.
A fixed-price contract sets the total cost upfront. A cost-plus contract bills you for the actual costs as they come up, which carries more budget risk. We’ll tell you which one you’re looking at, and what it means for your finance.
It’s worth building a contingency buffer (extra money set aside) into your finance from the start. Cost overruns are common enough that lenders and brokers plan for them, rather than just hoping they won’t happen.
Generally yes, for a rough figure. Final approval will need your actual building contract and plans once you’ve chosen a builder.
Bring your plans or building contract, even a draft version. We’ll talk through how the finance would need to be set up.