Construction Loan
By George Giannakakis · M.Arch · RLA300580 · HIA Industry Judge
Last reviewed: · How we research
Construction Loan explained in detail
A loan specifically designed for building a home, where funds are drawn down progressively as construction reaches defined stages (progress payments). You typically only pay interest on the amount drawn, not the full loan. Construction loans convert to a standard home loan upon completion. Deposit requirements vary by lender, so it is worth speaking with a mortgage broker about your options.
This episode is for First Home Buyers. We begin with essential finance tips and a rundown of the current government grants available. Then, we explain how to balance location with budget, and also touch on builder discussions, deposit amounts, your needs vs wants list and much more. Don't miss out on this invaluable advice for a successful first home build!
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Frequently Asked Questions
Common questions about construction loan
Construction loans release funds in stages as your build progresses: deposit, slab, frame, lock-up, fixing, completion. You pay interest only on amounts drawn during construction. The loan converts to a standard principal-and-interest mortgage at completion. You'll need to provide your building contract and plans, and the lender will arrange progress inspections.
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Verify against the binding rules in your state
BuildPilot is an independent Australian building platform, we publish guidance, we don't hold a building licence. Every Australian residential build must comply with the National Construction Code plus state-specific Acts and consumer-protection law. The authorities below are the primary sources of truth for the rules that actually apply to your project.
National
The primary national set of technical building standards that every Australian build must comply with. Volume 2 covers Class 1 & 10 buildings (most homes).
Specific material, product and method standards (e.g. AS 3700 masonry, AS 1684 timber framing) referenced by the NCC.
National peak body for residential builders. Publishes the most widely used home-building contracts and consumer guidance.
National peak body for general builders. Publishes commercial and residential contracts and industry guidance.
By state & territory
Links above open the public website of each authority. BuildPilot is not affiliated with these bodies and does not act on their behalf. Information on this page is general - check the current edition of the NCC and the relevant state Act for binding requirements.
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