Building & renovation loans

  • Building a new home?
  • Planning a major renovation/extension?
  • Construction loan is ideal
  • Only pay interest on amount drawn down
  • May be eligible for Housing Construction Grant

When it comes time for you to build your new home, or if you are undertaking major renovations to your existing home, a construction loan (building loan) is usually the most appropriate home loan option.

A construction loan is different to a standard home loan whereby the amount of the construction loan is usually drawn down in stages, instead of getting the total amount of the loan on settlement.

Draw down payments usually commence with the initial purchase of land, and then followed by payments at various stages of the building process.

This gives you comfort of knowing that you have the finance available for the project and only pay for it when it is needed at each progress stage.

How the construction loan (building loan) works

Whilst certain lenders have different conditions, you generally only pay interest on the loan equivalent to the amount you have to draw down at each stage of the building process.


If you have applied for a $380,000 loan for a house and land package, but have only drawn down $150,000 to purchase the land, then you only pay interest on the $150,000, not the full amount. If you then pay the builder another $100,000 as a building commencement deposit, you start paying interest on the new drawn down amount of $250,000. This continues until you've made all payments, only paying interest on the total cumulative amount borrowed to date.

With hundreds of different loan products in the market from all lenders, it can be a daunting time to go shopping for a home loan if you are doing it yourself or don't know what to look for. The benefits of why you should use a professional Time Finance Mortgage Broker are guaranteed.

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Depends on the size of your deposit, the value of the property, and your servicing capacity (based on your income and how much you are able to repay).


Most mortgage lenders will require a deposit of 20% or more of the property price. Less may be required however will require mortgage guarantee insurance in most cases


Depends on the type of loan, intrerestr rate, payment term, and whether you pay monthly or fortnighly. Use us mortgage calculators to guide you.


Every state is different and may depend on the value, whether you are building or buying an established home. Read more in our FHOG article


It is a rate that includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure that lets you compare loans from differengt lenders on a fair comparison.


This 'in principle approval' is usually valid for 3 months. Gives you the confidence on how much you can borrow before your purchase a property.


The cost of Stamp Duty varies between States and Territories. Subject to your personal loan circumstances, the cost of stamp duty can be included in the loan amount you borrow.

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With time and patience the mulberry leaf becomes a silk gown

Benjamin Franklin