Construction Home Loans
Plan land and building finance, progress payments, valuations and contingency funds before committing to a construction project.
One project, several finance decisions
A construction loan funds a home being built rather than only a completed property. Land purchase, site preparation, the building contract and the finished-home valuation all need to fit the lender’s assessment.
Many construction arrangements release funds progressively as approved stages are completed. The lender’s drawdown, inspection and interest rules depend on the product and contract; do not assume every construction loan follows the same schedule.
Prepare a complete project budget
Bring the land contract, builder quotation or signed building contract, plans, specifications, approvals, insurance information and your income documents. Ask the lender what it requires before paying a non-refundable deposit.
Allow separately for site works, variations, landscaping, driveways, service connections and delays. A fixed-price building contract may still exclude significant costs. The completed valuation can be lower than land cost plus build cost.
Interest during building and repayments after completion
Check whether repayments during the build are based on drawn funds and whether they are interest-only. At completion, a switch to principal and interest can lift repayments. Compare both stages before choosing a budget.
An owner-builder project or major renovation may need different criteria from a licensed-builder fixed-price contract. We assess the actual project rather than promising a universal deposit or approval rule.
Keep reading
This page is general information only and not financial advice. Lending criteria, rates and government schemes change — speak to an XLOANS broker for advice tailored to your situation. XLOANS is a Melbourne-based mortgage broking service.
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