Home › Construction
Construction and building · progressive drawdown
Building finance, drawn down in stages
A construction loan does not hand you the money at settlement. It releases it in stages as the build progresses, and that changes almost everything about how it works.
Construction lending works on progressive drawdown. The lender releases funds at set stages — typically slab, frame, lock-up, fit-out and completion — and each release usually requires an inspection or a valuation. You pay interest only on what has been drawn, which keeps repayments low early and rising through the build.
The document that matters most is the building contract. Lenders want a fixed price contract from a licensed builder, and they lend against the as-if-complete valuation. Cost overruns outside that contract are generally your problem, not the lender's, which is why the contingency you set aside is the single most useful protection you have.
What it covers
- New builds on land you already own
- House and land packages
- Knockdown rebuilds
- Major structural renovations
- Owner builder projects, with a narrower panel
- Refinancing to a standard loan once the build completes
What you get from us
Interest only during the build
You pay on the drawn balance, so early repayments are low and rise stage by stage.
Valuation is as-if-complete
Lenders assess the finished property's value, based on your plans and contract.
Fixed price contracts matter
A fixed price contract from a licensed builder opens up far more of the panel.
Owner builders are harder
Fewer lenders, lower ratios, more documentation. Possible, but plan for it.
Eligibility
What lenders look at
- You're 18 or over and an Australian citizen or permanent resident
- You have some regular income — from work, self-employment, superannuation, investments or a pension
- You're borrowing an amount you can service comfortably — most of our panel starts around $10,000
- You can comfortably meet the repayments alongside your existing commitments
Every lender on the panel weighs these differently, so none of it is a fixed cut-off — send the enquiry and we'll tell you honestly what is and isn't available. If money is already tight, the National Debt Helpline offers free, independent financial counselling, with nothing to sell you.
Enquire about construction
Two minutes. No credit check.
The market right now
Where home loan rates sit
RBA cash rate: 4.35% p.a.
Held at the Reserve Bank's 11 August 2026 meeting, effective 12 August. The Board next meets on 29 September 2026. Variable home loan rates generally move with the cash rate, though lenders do not always pass changes on in full.
Advertised variable rates: from about 5.69% p.a.
Around a dozen lenders currently advertise owner-occupier variable rates below 6% p.a. The lowest big-four variable is Westpac's Basic Variable at 5.99% p.a. (comparison rate 6.00% p.a.). Average variable rates on loans already written sit near 5.5% p.a. for owner-occupiers and 5.7% p.a. for investors.
These are market figures, not an offer of credit and not our
panel's pricing. They are published so you can see roughly where the market sits
before you enquire. Sourced from RBA and public lender comparison data, last reviewed
. The rate actually available to you
depends on the lender, the property, your deposit or equity and the lender's assessment
of your circumstances.
Comparison rates are based on a loan of $150,000 over 25 years.
WARNING: a comparison rate is true only for the example given and may
not include all fees and charges. Different terms, fees or loan amounts might result in
a different comparison rate.
Common questions
Before you enquire
How do progress payments work?
The lender releases funds against build stages, generally slab, frame, lock-up, fit-out and completion. Your builder invoices for a stage, the lender inspects or values, then pays the builder directly. You do not usually handle the money yourself.
What happens if the build costs more than the contract?
Variations outside the fixed price contract are generally yours to fund. Some lenders will consider an increase, but it means a new assessment and often a new valuation, and it delays the build. A contingency of around 10% of the contract is prudent.
Can I get a construction loan as an owner builder?
Yes, but the panel narrows considerably, lenders typically lend a lower proportion of the value, and you will need to document your experience and licensing. It is workable if you go in expecting more scrutiny.
What happens when the build finishes?
The loan usually converts to a standard principal and interest home loan. That conversion is a good moment to review whether your lender is still the right one, since you are no longer tied to the construction product.
Talk it through before you sign the contract
Construction finance is easier to arrange before you commit to a builder than afterwards.
Start an enquiry