Construction Loans

Unlike a standard home loan, where you borrow the full amount upfront, a construction loan releases funds in stages as your build progresses. This means you only pay interest on the money you've actually used, which can save you thousands during the construction phase.

The following are the standard stages of construction, payments are disbursed upon the completion of each phase of construction:

• Slab: The foundation is established

• Frame: The structure is constructed

• Lock-Up: The installation of external walls, windows, and doors

• Fixing: The internal finishes and fittings have been completed

• Final inspections and handover: Completion
  
  

• Land Ownership or Contract
  You'll need to either own the land already or have a contract to purchase it. Some lenders can include land purchase in your construction loan if you're buying and building simultaneously.

• Detailed Building Contract
  A fixed-price building contract with a licensed builder is essential. This contract should clearly outline the build specifications, timeline, and total cost. Most lenders require builders to have appropriate insurance and licensing.

• Council-Approved Plans
  Your building plans must be approved by the local council before construction can begin. Lenders need to see these approvals to assess the project's viability.

• Accurate Cost Breakdown
  You'll need a comprehensive breakdown of all costs including land (if applicable), construction, council fees, professional fees, and a contingency buffer for unexpected expenses.

Compared to a regular mortgage, construction loans require more steps, and the policies vary from lender to lender. We walk you through every step of the process to make it easier.

Here is what we do:

• Explain how it works.
  We walk you through the loan terms, including interest-only periods, progress payments, and what to anticipate as your build progresses.
  

• Check your borrowing capacity
  To determine your borrowing capacity, we assess your income, savings, expenses, and current liabilities.
  

• Look for lenders that provide construction financing.
  We evaluate over 40 lenders to identify those that provide competitive terms for construction financing and are adaptable and responsive.
  

• Help you apply for government support
  You might be eligible for financial aids such as the First Home Owner Grant. We'll assist you in applying for all the government schemes available.
  

• Oversee the stages of paperwork and payment.
  To ensure that progress payments are processed efficiently, we work with your lender and builder.
  

If you are building your first home or making major upgrades, you may be able to access the following:

• First Home Owner Grant
  If you're building your very first home, you might be eligible for a one-off payment to give you a bit of a head start. The amount you receive and whether you qualify depends on the state you're buying in, so it’s worth checking the local rules.

• First Home Guarantee
  Don’t have a huge deposit saved? This scheme lets you buy your first home with just a 5 percent deposit and helps you avoid paying Lenders Mortgage Insurance if you’re eligible. It’s a solid helping hand for new buyers.

• Stamp Duty Concessions
  Stamp duty can take a big chunk out of your budget, but some states offer full or partial exemptions if you’re building a new home within certain price limits. Not having to pay can ease the upfront costs.

If you're exploring construction loans in Australia, it helps to know upfront that not every property or area will be accepted by every lender. That’s exactly why people choose to work with Investors Mortgage.

We guide you through what is typically allowed and flag anything that could slow things down. Some lenders are strict about certain suburbs. Others have limits around the type of home you’re building — whether it is a house, townhouse, or duplex. Your land value and construction costs also impact how much you can borrow.

Sometimes lenders reject applications based on unusual designs or higher-risk areas. At Investors Mortgage, we help you identify those red flags early and avoid setbacks later on.

• Extended Timeframes
  Construction delays due to weather, material shortages, or builder issues can extend your timeline and potentially cost more.

• Cost Variations
  Changes to plans or unexpected site issues can increase costs. Your contingency fund helps manage this risk.

• Paying For Two Properties Temporarily
  If you're building while living elsewhere, you might face rent or mortgage payments plus construction loan interest simultaneously.

• Builder Reliability
  Research your builder thoroughly. Check licenses, insurance, references, and previous work to avoid costly problems.

• Can I use a construction loan for renovations?
  Yes, as long as the renovation is large enough and meets the lender’s requirements.

• How much deposit do I need?
  Most lenders ask for 10 to 20 percent. If you’re eligible for the First Home Guarantee, you could start with as little as 5 percent.

• What happens if the build is delayed?
  We work with lenders who offer flexible drawdown schedules, so if something runs behind, you’re not stuck.

• Can I use my own builder?
  Yes, as long as they’re licensed and can give a fixed price contract. We’ll double check that your lender is happy with the builder.

• What happens after construction?
  We help you move into a regular home loan that suits your long term goals, with features and rates that match your needs.