Construction Loans in Australia

Construction loans can be quite different from a standard home loan, so it is important to understand what you are entering into. The maximum percentage you can borrow is up to 95% of the property’s value, including the cost of Lenders Mortgage Insurance. Many lenders also offer interest-only repayments during the construction process which revert to principal and interest repayments once construction is complete.

To qualify for a Construction Loan, you will need to have council approved plans and a fixed price tender from a registered builder. You should also note that you will need to use your saved funds or equity before drawing down on your Construction Loan.

The construction loan is drawn down in stages (Base, Frame, Outer brick work, lock up stage & practical completion) as your property is being built. This means that your monthly mortgage repayments slowly increase as the construction moves forward until finally, at the completion of construction, the loan repayment reaches its full monthly repayment amount.

Always check with your broker if you would like to make any variations to your building contract, prior to proceeding. Upon completion of the dwelling, the construction loan will revert to the loan product originally chosen by you.

Upon completion of construction, you will need to obtain an Occupation Certificate, also known as an Occupation Permit, from your local council.

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