A construction loan in Australia helps fund your build in stages. Offering flexibility, cash flow control & customized repayment options as your property takes shape. Whether you are building a new home, duplex or investment property. Choosing the right construction loan can make all the difference.
What Is a Construction Loan?
A construction loan is a type of home loan that is made for specifically building projects. Like traditional home loans, a construction loan releases funds progressively that is structured with key milestones in your build.
- Progressive Drawdown: Funds are released in stages (slab, frame, lock-up, fit-out, completion)
- Interest Only During Construction: You only pay interest on the amount drawn down
- Loan Conversion: After completion, the construction loan usually converts to a standard principal & interest home loan
Benefits of a Construction Loan
- Cash Flow Control: Pay only for what is been built. No upfront lump sum
- Customisation: Ideal for bespoke builds, knockdown-rebuilds or major renovations
- Government Incentives: First Home Owner Grants and other schemes may apply depending on your location & eligibility
- Stamp Duty Savings: In many cases, stamp duty is payable on the land only. Not the full build. Depending on your contract structure
- Interest Only Repayments: Helps manage repayments while construction is underway
How to Apply for a Construction Loan?
To apply for a construction loan in Australia, you will typically need:
- A fixed price building contract
- Council approved plans and permits
- Builder’s insurance and credentials
- Detailed cost breakdown and timeline
- Personal financial documents (income, liabilities, savings)
Risks of a Construction Loan
- Cost Overruns: Changes mid-build can trigger budget blowouts
- Delays: Weather, supply issues, or builder availability can affect timelines
- Valuation Gaps: Final property value may differ from projected cost
- Interest Rate Changes: Variable rates during construction can impact repayments
Compare Construction Loan Options with ROVO Finance
ROVO Finance helps you compare construction loan options across major banks and specialist lenders. We support you through:
- Pre-approval and lender selection
- Structuring your construction loan for flexibility and affordability
- Managing drawdowns and post-build refinancing
Explore your options at ROVO Finance’s Construction Loan page.
