Understanding Construction Loans

Whether you’re completing major renovations, knocking down an existing property or re-building and starting fresh, a Construction Loan may meet your needs. 

Download our Construction Loan Guide (PDF)

Coronavirus temporary changes: With the current uncertainty surrounding coronavirus, the financial and personal wellbeing of our customers and people remains our priority. We've made temporary changes giving you more time to complete your construction – see the Timing section for more information.

HomeBuilder Grant: HomeBuilder is an Australian Government initiative providing eligible Owner Occupiers with a grant of $25,000 to build a new home or substantially renovate an existing home. See our HomeBuilder Grant page for more information. 

Features & benefits

Flexibility

Construction Loans have Interest Only payments during the construction period, meaning your repayments are lower throughout this time.  

Convenience

You can make additional payments into your Construction Loan at any time. This reduces your loan balance and means you may pay less interest. 

Build in stages

Building a property or undertaking major renovations is a big project, so it’s important you know what to expect at each stage. Construction Loans give you the flexibility to draw down the loan at various stages of the build (also known as Progress Payments). Your Progress Payment Schedule will typically have 5-6 stages during the construction period.

For more information on what to expect, see our step-by-step Construction Loan timeline.

Important things to know

Availability

A Construction Loan is only available for houses built and kept for personal investment or residential purposes and not for building dwellings that you plan to sell immediately. Speak to your Home Loan Specialist to discuss your construction requirements. 

Fees & Progress Payments

Your build is funded through a series of Progress Payments and paid to your builder after each stage of construction is completed. Your builder will provide you with an invoice, and once you’re satisfied that the work has been completed, sign the invoice and forward it to your Home Lending Specialist or Broker who will then arrange for your builder to be paid.

A Progressive Drawing Fee applies for each Progress Payment request made. These fees will be added to your home loan once the final payment has been made.

Timing

Construction must commence within six months from the Disclosure Date on your loan contract. You’ll then have up to 24 months to complete construction. Once you provide us with the invoice for the final Progress Payment to be paid to your builder, we’ll conduct a final inspection to ensure that the property has been built to the building contract specifications. 

Coronavirus temporary changes: We’re extending these times for new and existing Constructions Loans with a Disclosure Date between 6 October 2019 and 6 October 2020. You must commence drawing your Construction Loan within 12 months from the Disclosure Date and complete the construction within 30 months of the Disclosure Date.

Repayments & loan term

While your loan is progressively drawn, we only charge interest on the amount drawn down. You’ll need to make Interest Only payments on this amount on the 15th of every month. Once the final Progress Payment is made, your loan product and repayment type will switch to what you chose at origination. 

Your contracted loan term (typically 30 years) also officially commences at this time. 

How to apply

Make an appointment with one of our Home Lending Specialists to discuss whether a Construction Loan may be right for you and your circumstances.

Book appointment

Things you should know

Subject to credit approval. Fees, charges, terms and condtions apply. As this advice has been prepared without considering your objectives, finanical situation or needs, you should consider its appropriateness to your circumstances before acting on the advice.