Building and construction loans

Building something new?

Finance for building a home or an investment property. The lender pays your builder in stages as work is completed, so you pay interest only on what has been drawn. New builds are exempt from some deposit limits, so a smaller deposit can be enough.

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How it works

ApprovalPre-approval on your plans and fixed-price contract
ValuationAn 'as if complete' valuation sets the lending
Progress paymentsFunds released as each stage is completed and checked
CompletionFinal payment at completion, usually once the code compliance certificate is issued
RepaymentsThe loan moves to your chosen fixed and floating structure

Who it suits

Building on land you own or are buying
House-and-land packages
Knock-down and rebuild projects
Building a rental or a second home

What lenders look at

A fixed-price building contract
A valuation of the finished home, based on the plans
The builder's track record and guarantee
Your income at the full, finished loan amount

What to prepare

Tick them off as you go.

Building contract and payment schedule
Plans, specifications and consents
Builder's guarantee details
Land title and purchase documents

Questions to ask

How many progress payments are there, and when?
What happens if costs run over?
When do principal repayments start?
Is a builder's guarantee required?

Everyone's situation is different. Lenders weigh things differently and small details change the answer. An adviser can tell you where you stand with building and construction loans and what to do next.

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