Construction Loans for New Builds & Knockdown Rebuilds
Looking at building your dream home? We would love to help!
Based in Sydney's Hills District and helping clients right across Australia, we make construction loans simple.We can help you understand what documentation is required, what your borrowing capacity is and what your repayments will be when you do proceed. Our experts will explain all the other costs associated with getting a construction loan including stamp-duty, settlement fees and LMI (lenders mortgage insurance) if applicable.
We have access to over 40 lenders, including all the major banks, allowing us to secure a competitive loan package tailored to your needs.
Speak to our team of professionals and let them help you make your dream home a reality.
How a Construction Loan Differs From a Standard Home LoanConstruction loans don’t release all your funds at once. Instead, the loan is drawn down in stages — known as progress payments — that line up with the key phases of your build, such as the slab, frame, lockup, fitout and completion. Your lender releases each payment as that stage is finished, often after a valuer confirms the work, so you only pay interest on the portion of the loan that has actually been drawn. This staged structure helps keep your repayments lower during the build.
Interest During Construction and the Move to RepaymentsDuring the building phase, most construction loans are interest-only on the funds drawn so far, which helps manage cash flow while you may also be paying rent or an existing mortgage. Once the build is complete and the final progress payment is made, the loan typically converts to a standard principal-and-interest home loan. We can walk you through how this transition works and what to expect at each stage.
What You’ll Generally Need to ApplyLenders assessing a construction loan usually want to see a fixed-price building contract with a licensed builder, council-approved plans and permits, builder’s insurance details, and a breakdown of the progress-payment schedule. Having these documents ready can make the process smoother. We can help you understand what each lender on our panel of over 40 requires and prepare your application accordingly.
SB finance does not offer personal advice and aims to provide information which is factual and in-line with lenders requirements and a customers best interest. We encourage you to seek independent legal and financial advice before proceeding. our credit guide and Privacy disclosure is available on our website.
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With access to over 40 lenders, we compare the market to find a finance option suited to your situation. Terms and conditions, fees and eligibility criteria apply.
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Here at SB Finance we treat everybody like one of the family. We pay attention to the detail and make sure we offer nothing but first class service tailored to your needs!
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Frequently Asked Questions
A construction loan is usually assessed on the land value plus the fixed-price building contract, with the lender advancing a percentage of that combined figure. Your income, living expenses, existing debts and the lender’s buffer all shape the amount. Lenders also differ on how they treat owner-builder work and contract variations.
You can build under a single fixed-price contract with a licensed builder, buy a house and land package under two separate contracts, knock down and rebuild on land you already own, or renovate on a construction basis. Each is assessed differently, so arrange the loan before you sign a contract.
It is harder than a standard purchase because the lender is funding a build in stages, but it is not impossible. Lenders look closely at the size, age and status of any default and at the builder’s contract. We check your credit file first and target lenders whose policy allows it.
Most lenders want at least 5% of the combined land and build value from genuine savings, and a deposit under 20% will generally attract Lenders Mortgage Insurance. Equity in land you already own can count towards the deposit. Allow separately for council, utility and landscaping costs, which lenders often exclude.
Yes. If the loan exceeds 80% of the combined land and completed build value, Lenders Mortgage Insurance is generally payable and is usually capitalised into the loan. Where you already own the land outright, the equity in it often brings the loan under 80% and avoids the premium.
In NSW, duty is generally payable on the land transfer rather than on the building contract, which is one reason a house and land package is often written as two contracts. Concessions for eligible buyers of new homes or vacant land are set by Revenue NSW and change over time, so confirm the current rules.
Start with a free assessment before you sign a building contract. We review your land, plans, contract, income and credit position, then model capacity across our lender panel. We lodge the application, arrange the valuations, and manage the progress draws with your builder through to handover.
Where to go next
A construction loan is drawn down in stages against the builder’s contract rather than settled in one lump sum, which changes both the paperwork and the assessment. The home loans overview covers the standard products, and first home buyers building a new home should also read first home buyer loans.