A construction loan is a type of home loan designed specifically for people building a new home. Unlike regular home loans (which are paid out in full upfront), construction loans are paid in instalments — usually called progressive drawdowns — as your build moves through key stages.
These stages typically include:
Each time your builder completes one of these milestones, your lender releases the next portion of the loan to cover the cost.
You’ll start making loan repayments as soon as your land settles — this is when the lender pays for your block and it officially becomes yours. At this stage, you’ll only be making repayments on the amount borrowed to purchase the land, not the full build cost.
Here’s how it usually works:
This depends on a few factors, such as:
Your lender or mortgage broker can give you a personalised estimate, so you’ll have a clear idea of what your repayments will look like throughout each stage.
