Construction Loans Are Everywhere Right Now. Here’s How to Get Yours Right.

A few years ago, we might have written a construction loan once a month, sometimes only a handful in a year. Today they’re one of the most common enquiries landing on our desks.

The reasons aren’t hard to find. Government budget changes, state-based grants for new builds, house prices that make established homes harder to reach, and plenty of people who simply want something new that’s built for the way they live. The tide has well and truly turned.

So if you’re thinking about building, here’s what you need to know before you start.

A construction loan is a normal loan, just in pieces

At its heart, a construction loan works like a regular home loan. The difference is that the money is released in stages as the build progresses, rather than in one lump sum on settlement day.

That sounds simple, but each stage has its own moving parts, and they all need to line up.

The land comes first, and so does the waiting

Most builds start with buying the land. If it’s an off the plan block, you may be waiting for it to title before anything else can happen.

Then there’s the gap many people don’t plan for. Once you own the land, it can be three, six or even nine months before your build contract is finalised and construction actually begins. During that time you’re often paying a land loan and rent somewhere else at the same time. That’s a real pressure on cash flow, and it needs to be part of the plan from the beginning, not a surprise halfway through.

Every stage needs attention

Between buying the land and getting the keys, there’s a lot to manage. You’ll need to keep a deposit available for your builder, work through council approval, and line up progress payments as each stage of the build is completed. Along the way there are valuations, variations, inspections and paperwork that all have to be signed off before the next payment is released.

We walk alongside you through every one of those stages. You won’t be left trying to work out what the lender needs next or why a payment hasn’t come through.

When the timing slips, things unravel fast

We recently started working with a client who had come so close. They’d secured two pre approvals, but both expired before the build was ready to go. In the meantime their borrowing capacity changed, and with the timing falling through the cracks, their construction contract expired too.

They were back to square one.

None of it came down to one big mistake. It was a series of dates and details that nobody had mapped out together. That’s exactly why we put so much weight on preparation. When we know the timeframes at the start, we can track pre approval expiry dates, plan for changes in your situation and keep everything moving in step with your builder.

Part built homes are a much harder story

Lately we’ve seen a growing number of people come to us with a home that’s partly built, planning to borrow more once it reaches lock up stage. Sometimes that’s how the original arrangement was set up, and we understand how people end up there.

But finishing a part built home is a very different and much harder lending scenario. Lenders view an incomplete build cautiously, valuations become trickier and options narrow quickly.

A build works best when it’s set up properly from day one. Same lender, same builder, the full cost of the project accounted for, and a clear plan for every stage. That’s how you avoid getting stuck halfway with a house you can’t finish.

Let’s get it right from the start

Building your own home should be exciting, not stressful. The difference usually comes down to how well it’s planned before the first shovel hits the dirt.

If you’re thinking about building, or you’re already partway through and things feel uncertain, make an appointment with one of our brokers. We’ll meet face to face or online, map out every stage of your build, and make sure there are no surprises along the way.

This article is general information only and doesn’t take into account your personal circumstances. Grant eligibility varies by state, so check the current rules where you’re building.