Construction Loans in Sydney
A construction loan pays your builder in stages as the work is done, and you pay interest only on the amount drawn so far. We help Sydney owners finance new builds, knockdown-rebuilds, granny flats and major renovations, and choose lenders whose valuation and progress-payment processes suit your builder.
Reviewed by Vikas Gupta, MFAA member · Updated
How progress payments work
Most lenders release funds in five or six stages, after an inspection or builder's invoice for each:
Deposit
Usually 5% of the build contract.
Base / slab
Foundations poured.
Frame
Wall and roof frames up.
Lock-up
Walls, roof, windows and doors in.
Fixing
Internal fit-out.
Practical completion
The home is finished and handed over.
During the build, repayments are usually interest-only on the drawn balance. At completion the loan converts to a standard home loan.
What you'll need
- Fixed-price building contract with a licensed NSW builder
- Council-approved plans or a complying development certificate (CDC)
- Specifications and the builder's payment schedule
- Home Building Compensation Fund insurance certificate (required in NSW for residential work over $20,000)
- Land contract or title, if you already own the land
Things that can catch you out
Valuation shortfalls
The bank values the finished home on the plans; if it’s lower than land plus build cost, you need more deposit.
Variations
Changes during the build usually have to be paid from your own funds first.
Holding two costs
Rent or an existing mortgage while you build.
Owner-builder projects
Fewer lenders accept these; talk to us early.
First home buyers building new
First home buyers building a new home may also qualify for the $10,000 NSW First Home Owner Grant on house-and-land or builds up to $750,000.
Construction loan questions
How long is the interest-only period?
Usually 12–24 months, depending on the lender.
Can I use a construction loan for a knockdown-rebuild?
Yes. You may need bridging or alternative accommodation while it's built.
Helpful tools
Related services
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