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Construction Loans

What is a Construction Loan?

You need a Construction Loan when you want to build a new home, whether it is on a block of land that you already own or part of a House & Land package.

A Construction loan is generally drawn down in stages as the builder reaches the different milestones stipulated in the Building Contract.

Citiwide - Construction Loans

These stages are generally:

  1. The base stage (i.e. when the concrete slab is laid)
  2. The frame stage (i.e. when the framework or walls are up)
  3. Lockup stage (i.e. when the roof, door and windows are in place)
  4. Fit out stage (i.e. when the house has been fitted out with appliances)
  5. Completion (i.e. the house has been completed and is ready for occupation)

The lender uses an independent valuer to monitor the construction process and only makes progress payments when the builder has reached the defined stages and met satisfactory standards.

Most lenders only require interest payments on the loan during the construction phase. After completion the loan reverts to a standard Principal & Interest repayment loan and you have the option of choosing between different loan types, including Fixed Rate loans.

A construction loan helps to minimise your mortgage repayments until your new home is completed

In addition to your income and savings records, the documents you will need to apply for a construction loan are:

  1. A "fixed price" Building Contract with a registered builder.
  2. The Council approved plans for the proposed house
  3. The house specifications documents.
  4. Proof of the Builder’s current building insurance
  5. In the case of a House & Land package, the purchase contract for the block of land.

Finance is available up to 95% of the property value.


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