Construction loans
Build a new home, do a knockdown rebuild, or fund a house and land package. We compare construction loans across 35+ lenders and structure your progress payments the right way. $0 cost.
A construction loan is built for a home that does not exist yet, whether that is a new build, a house and land package, or a knockdown rebuild. Instead of releasing the full amount at settlement, the lender pays it out in stages as your build hits each milestone, and you only pay interest on what has been drawn. We compare construction loans across 35+ lenders and structure it the right way, at $0 cost to you.
Most lenders need a fixed-price contract with a licensed builder, and release the funds in stages against that contract, with a check at key stages of the build. That staged structure is not just process, it is one of your best protections if a build runs into trouble, because your money stays tied to the build rather than sitting with the builder. Once your home is finished, the loan converts to a normal mortgage.
Building can also open doors that buying established does not, from the First Home Owner Grant to a more tax-friendly position for investors after the 2026 changes. We cover all of it below.
A construction loan releases funds in stages as your build hits each milestone, in line with your fixed-price contract and with a lender check at key stages. You only pay interest on what has been drawn. Here is a typical drawdown schedule.
| Stage | What happens | Typical share of the build |
|---|---|---|
| Deposit | Paid to your builder to start | ~5% |
| Base | Slab and footings laid | ~15% |
| Frame | Walls and roof frame up | ~20% |
| Lockup | Windows, doors, and roof on | ~20% |
| Fixing | Internal fit-out and cabinetry | ~25% |
| Completion | Finishes and handover | ~15% |
Illustration only, the exact stages and shares vary by lender and builder. Funds are released stage by stage against your fixed-price contract, with a lender check or valuation at key stages such as the base and completion, and you pay interest only on what has been drawn. Use our repayment calculator or book a free consult to work through your build.
Builder insolvency has been one of the biggest risks in building lately, with thousands of construction firms across Australia collapsing in the past year. If a builder goes under mid-project, you can be left with a half-finished home and the cost of getting someone else to complete it. It is worth taking seriously before you sign.
The good news is that a well-structured construction loan helps protect you. Because the loan is released in stages against your fixed-price contract rather than all at once, your money stays tied to the build instead of sitting with the builder, and lenders check progress before releasing funds, often with an inspection or valuation at key stages like the base and completion. On top of that, in NSW most residential building work must carry Home Building Compensation cover, which can help if your builder cannot finish or fix defects.
Before you commit, it pays to check the builder’s licence and insurance certificate, ask for recent references you can actually call, and be wary of a fixed price well below everyone else, which was a warning sign in several recent collapses. We help you set the loan and the checks up so your money stays tied to real progress.
Building can unlock help that buying established does not. In NSW, the $10,000 First Home Owner Grant is for new homes only, so a new build or a house and land package can qualify, and new builds can also fit the low-deposit schemes. If it is your first home, our first home buyer page walks through what you can stack.
For investors, the 2026 budget made new builds stand out. From 1 July 2027, negative gearing against your salary ends for established homes bought after 12 May 2026, but new builds stay exempt and keep that benefit. Capital gains tax is also changing from 1 July 2027, with the 50% discount being replaced, and the treatment of new builds can differ, so the CGT side is worth confirming with your accountant. See our investment page for the full picture.
The short version: building can be more tax-friendly than buying established, especially for investors, but the rules are still settling. Everything here is general information, so check your own situation with your accountant.
The structure is where the value is. These are the things we get right so your build runs smoothly.
Real answers to the questions people ask us about building and construction finance.
We compare 35+ lenders, check your building contract, structure your progress payments to protect you, and manage the drawdowns through to handover. $0 cost.
MFAA member. 10+ years lending experience.
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Construction loan specialists helping builders and renovators across 220+ Sydney suburbs and Australia wide. Meet our team. Service regions: Sydney CBD, Sydney Central, Eastern Suburbs, Northern Beaches, North Shore, Inner West, Sutherland Shire, Hills District, St George, Canterbury-Bankstown, Western Sydney, Penrith.
