Construction & Land Finance

A construction loan funds the build in stages — typically across five or six progress payments tied to milestones (slab, frame, lock-up, fixing, completion). The lender requires an executed fixed-price building contract, council-approved plans, builder insurance and a valuation done on an "as if complete" basis. During the build, interest is usually charged only on the funds drawn down so far; the loan reverts to a standard principal-and-interest home loan after completion. Lender policy varies.

Each progress payment is requested by the builder, supported by an invoice and (depending on the lender) a stage inspection or valuer sign-off. The lender pays the funds directly to the builder once the stage is confirmed. The exact mechanics — number of stages, inspection requirements, timing — vary by lender and are confirmed in writing at engagement.

A fixed-price contract sets the total cost of the build at signing, with provisional sums called out separately. Variations during the build (changes the buyer requests, or unforeseen site costs) are added on top. A cost-plus contract bills actual costs plus a builder margin and is less common in residential construction lending — many lenders will only fund off a fixed-price contract. Variations and provisional-sum draws need to be planned for in cash-flow terms, not just relied on as "covered by the loan".

Yes, for some lenders and to some maximum LVR. Vacant land lending is a narrower part of the residential-lending market — fewer lenders, lower LVRs, and stricter policy on the intended timeline to build. We scope vacant-land enquiries with the build timeline in mind so the lender shortlist is realistic.

Lender approval and documentation usually take four to eight weeks. The build itself depends entirely on the contract — small builds eight to twelve months; larger or custom builds longer. Construction loans typically have an outer date by which the build must be complete; if the build runs over, the loan may need to be extended or refinanced. We diarise the outer date at settlement.

During the build, your existing accommodation cost (rent or current mortgage) typically continues alongside the progressively-drawing construction loan. Variations, provisional-sum overruns and timing gaps between progress draws are normal — a meaningful cash-flow buffer outside the loan is sensible. This is general information only; the right buffer depends on your circumstances and the contract.

On practical completion the construction loan rolls into a standard principal-and-interest home loan with the same lender. Some borrowers refinance at completion to take advantage of better rates or to restructure for an investment-property use. Either way, the "completion" event is a natural review point and we can scope a refinance review then.

Yes, subject to lender policy. Investment construction and knock-down-rebuilds are assessed differently from owner-occupier new builds — the lender shortlist narrows and the documentation requirements increase. We scope the structure (owner-occupier vs investment, existing equity vs new finance) before any lender is approached.

Not always. Driveways, landscaping, pools, fencing and flooring are often quoted separately from the fixed-price contract. Some lenders include them if formal quotes accompany the application; others exclude them, meaning those items come from your own funds after handover. We confirm what the shortlisted lender will fund before lodgement, so exclusions are budgeted rather than discovered at the final draw.