Build your home with the finance properly planned.
Construction lending works differently from a standard home loan. I help you understand the numbers, lender requirements and progress payments before the build begins, then stay with you through to completion.
A construction loan is more than a borrowing limit.
The loan needs to work with your land, building contract, expected costs, valuation and timing. A lender may approve the overall facility, then release money in stages as the build progresses.
That means decisions made before you sign can affect your cash contribution, repayments and ability to manage changes during construction. My role is to help you see the full picture early and explain what happens next in plain English.
What will it cost to move in, not just to build?
A builder’s headline price may leave out costs that still need to be paid. Use this checklist with your written quote to find the gaps before you commit. If a cost is already included, do not count it twice.
Start before the slab
Land price, duty and legal costs, soil tests, site preparation, retaining walls, drainage, service connections, permits and required reports.
Read the allowances
Check prime cost items, provisional sums, engineering requirements, progress payment stages, variations and how price changes are approved.
Price the finished home
Flooring, window coverings, lighting, air conditioning, appliances, driveway, fencing, landscaping and any external work outside the contract.
Plan for the wait
Rent while building, loan interest, rates, insurance and a personal buffer for delays or unexpected changes.
Ask the builder to mark inclusions and exclusions in writing. Write down the extra costs and your working total as you compare quotes.
The construction loan journey, made clear
Five clear stages show when the land loan is established, how construction funds are released and what to review once the home is complete.
Land
The land settles
The land portion of your loan is drawn and the mortgage over the land is established.
Ready
Construction begins
Once the lender’s requirements are met, construction funding is ready for the builder’s first eligible claim.
Build
Progress payments
The builder sends an invoice for a completed stage. You check the claim and submit it as required by your lender. The lender then completes its checks before releasing the approved payment.
Complete
Final draw and handover
Once its final-payment requirements are met, the lender pays the approved final claim. Any unused loan funds are handled under the lender’s rules. Handover is arranged with your builder under the building contract.
Review
Review the finished loan
Confirm your final loan balance, repayment amount and when repayments change. Then review your rate, fees and loan features.
Buying land or choosing a builder?
Talk through the finance and timing before you make a binding commitment.
Six practical construction tips
A build has many moving parts. These simple habits can help you protect your budget, keep decisions clear and stay on top of the finance process.
Tip 01
Plan the whole budget
Look beyond the building contract. Include likely site costs, external works, finishing items and a sensible contingency for the unexpected.
Tip 02
Understand before signing
Know what is included, excluded and allowed for in the contract. Consider appropriate legal and building advice before making a binding commitment.
Tip 03
Know the payment stages
Understand when the builder expects each progress payment and what the lender may need before releasing construction funds.
Tip 04
Put variations in writing
Record agreed changes, prices and timing. A clear written trail makes it easier to track the effect of variations on your budget and build.
Tip 05
Keep records organised
Keep contracts, invoices, approvals, inspection information and important emails together so documents are easy to find when requested.
Tip 06
Check before major changes
Before taking new credit or making a major employment or financial change, speak with your broker about whether it could affect the lending position.
Six questions to settle while you can still choose.
Bring the land documents, draft build contract, specifications and quote to a finance conversation before signing where possible. A broker can check likely lender requirements; a solicitor or conveyancer can advise on contract terms.
What is really in the price?
Get written detail for site works, finishes, external works and every exclusion. Compare the quote with what you need to move in.
What can change?
Identify prime cost items and provisional sums. Ask how a change is priced, approved and paid for before it becomes a variation.
When is money due?
Land-contract deposit: paid to the deposit holder named in your land contract.
Builder’s deposit: paid under your building contract.
Your total contribution: the amount the lender requires you to put towards the project.
The first two are payments towards the land and building prices. They may count towards your total contribution, so do not add them twice. Confirm who you must pay, when payment is due and whether your own funds must be used before the lender releases construction money.
What if value and cost differ?
A lender’s valuation may be lower than your total project spend. Discuss the possible cash gap and a buffer before relying on your numbers.
What happens if dates move?
Check finance approval, land settlement, start and completion dates. Allow for rent, interest, rates and insurance if the build takes longer.
Could a scheme or grant help?
First home buyer support depends on eligibility and timing. Check the current federal scheme FAQs and the grants guide before buying land or signing.
Download the build-price checklist PDF and bring your working figures to the conversation.
Allow for the costs people forget
Watch the gap between the contract price and the amount needed to make the home complete. Site works, variations, landscaping, window coverings, flooring, driveways and delays can affect your budget.
A valuation may also differ from your total project cost. Planning for these possibilities early is far easier than trying to solve them once construction is underway.
Practical guidance, not just an application.
I am Liran Morris, an award-winning Mortgage Matrix broker with a background in real estate and property development. I understand that building a home involves a builder, contracts, deadlines, valuations and many moving parts, not simply a loan.
You deserve to know what the finance requires before the build starts, not after a problem appears.
I help construction borrowers across Australia, with a Perth base and phone or video appointments available. You will have someone to explain the process, follow up the details and stay involved through the build.
Clear answers before you build
Can a construction loan cover the land and the build?
It may be possible to finance the land and construction as part of the overall lending structure. The timing, contracts, deposit and lender requirements determine how the transaction needs to be arranged.
Do I need a fixed-price building contract?
Many lenders prefer a clear contract price and detailed specifications, but requirements are not identical across all lenders or projects. It is important to review the proposed contract and finance position before relying on a particular structure.
How do progress payments work?
Your building contract sets out when the builder can claim each payment. Before authorising a claim, check that the relevant work has been completed. The lender may require documents, your confirmation or an inspection before paying. Its checks are for lending purposes. They do not replace an independent check of workmanship, compliance or whether the work meets your contract. Consider an independent building inspector if you need help.
What happens to repayments while the home is being built?
Interest is generally charged on the amount already borrowed, so payments can rise as the lender pays more building claims. If your loan is interest-only during construction, those payments do not reduce the amount you owe. Repayments will generally rise when you start paying back both the loan and interest, even if the interest rate stays the same. Check the timing and budget for that amount before committing.
Can first home buyer support be used when building?
Some eligible borrowers may be able to use government schemes, grants or concessions when building. Eligibility, property limits and timing rules change, so current requirements should be checked for your circumstances before you commit.
Should I get finance advice before signing a building contract?
Yes. Understanding your borrowing position and likely lender requirements before signing can reduce the risk of committing to a project that does not fit your finance. Seek legal advice before entering a binding contract.
Is a builder’s base price the amount I need to borrow?
Usually there are other costs to check, including land purchase costs, site works, finishes, external works and holding costs. Use the build-price checklist and confirm every inclusion and exclusion in writing.
What are prime cost items and provisional sums?
They are allowances for items or work whose final cost is not settled when the contract is prepared. The actual amount can be higher or lower. Ask what each allowance covers and what happens if it changes.
Can I buy land now and build later?
Possibly. Land can be financed separately, but the later build still needs to meet lender rules and your circumstances at that time. Some first home buyer schemes also have land and construction timing conditions, so check before settling the land.
What if the bank values the finished home below my total project cost?
The lender may ask for more of your own funds or a different loan structure. A valuation is not a quote for the work, so it is worth discussing this risk before signing.
Who pays for variations during the build?
Do not assume a lender will automatically fund changes to the agreed contract. Ask for a written variation price, check your available cash and speak with your broker before approving a major change.
What if the builder is delayed?
Ask for a revised timeline in writing and tell your broker or lender early. A delay can affect holding costs, approval dates and the timing of progress payments.
Can I use a construction loan for an investment property?
Many lenders consider investment builds, but the deposit, income assessment, rates and loan structure can differ from an owner-occupied build. Grants aimed at first home owner-occupiers generally have different eligibility rules.
Can I build while keeping my current home?
Potentially. The lender will assess both properties, existing debt, income and the cash needed during construction. Equity may help, but it still needs a workable repayment plan.
Should I change jobs or take out new credit during construction?
Speak with your broker first. A major change to income, employment or debts can affect a pending approval, a future progress draw or refinancing options.
Still have a build question?
Bring your quote, plans or timing question to a free appointment.
Let’s work out what is possible before you commit.
Book a free appointment with Liran Morris to discuss your land, build budget, deposit or equity and the next steps for your construction loan.