Construction Loan:
Finance to build
your dream

Understanding Construction Loans Australia

If you’re looking to build a new home or making improvements to an existing one, construction loans are available to get you started in the right direction. Apply for residential construction loans with our mortgage brokers today!

What are construction loans? How do construction loans work?

Construction loans are a type of loan used to finance the cost of building a new home or renovating an existing property. A construction loan allows you to draw down money progressively whilst completing different stages of construction. It is also designed to ensure borrowers don’t draw down more than necessary or exceed your budgeted construction costs.

These are loans for home construction only: available for houses built and kept for personal investment or residential purposes and not for constructing dwellings that you intend to sell immediately. Most of these loans can also be used only with licenced builders.

Step-by-step process on how construction loans work

Step 1: Figure out your borrowing capacity

Talk to your mortgage broker for your borrowing capacity. You need to know you can borrow enough for the land and stil lafford to rent and pay bills until the construction is completed.

Step 2: Find your block of land

Consider the following:

Step 3: Research build ideas

Check out display homes and talk to builders to get an idea on what you like and the costs associated with the construction. 

Step 4: Buy the land.

Make an offer and get the land under contract. Discuss the following:

Step 5: Start your building plans

As soon as you have a contract on the land, you should be organising the construction. Finalise a set of plans. Are you working with a project builder? Do they have designs for you to choose from? Get quotes from builders in the form of a tender with all the specifications, inclusions, and allowances for the build.

Note: Talk to your construction loan broker if you are applying for construction loans on existing homes. The process can be a little different. 

Below are your construction loan financing options:

Speak to your construction financing broker to discuss your construction requirements.

The benefits of taking out home construction loans

Whether or not you need construction loans for renovations or building a new home, they usually have the same loan terms with a standard home loan. But as a special type of home loan, it offers many advantages not accessible with conventional mortgages.

Control

Draw down your loan in each stage of the construction, and only once the inclusions and quality of finish have been approved by you.

Improved cash flow

To help with cash flow, Interest Only payments are available during construction. You can make loan terms around the needs of your project.

Reduced interest

Pay interest only on funds drawn down, and not the whole amount upfront. This means lower repayments for you.

Convenience

Make additional payments into your constructionl loan at any time to reduce your loan balance. This means you may pay less interest.

Opportunities to save

A construction loan has a cheaper stamp duty as it is usually only paid on the land, not the home being built. Many state governments also offer extra concessions and grants if you’re building than buying an existing home.

Protection from financial loss

A construction loan can shield you against sloppy construction or incomplete work. The progress payments are only released to the builder after the completion of each stage of the build — to the required standard.

FAQs on Construction Loan Financing

You will be asked to provide a suite of documents including:

  • Council plans and permits
  • Insurance provisions
  • A copy of your fixed-price contract with a progressive payment schedule

ZEP Finance has access to a wide panel of lenders. We can negotiate for great deals for you on your behalf, and potentially ensure a preferential treatment for your application.

Your first drawdown would be for the land, and the subsequent progress draws would cover each stage of the construction process.

The renovations to be made on an existing property must be structural in nature. Simple projects like adding doors, windows, or anything of this nature will not be eligible for a construction loan.

The rates for construction loans tend to be higher than regular principal & interest (P&I) home loans. Be advised that from 20 September 2022, the interest rate that applies to your construction loan with a variable interest rate will increase by 0.59% p.a.

Your construction loan is ready to settle, what happens next?

  1. Once the loan settles the file will be sent to the progress payment team.
  2. The progress payment team will ensure they have all the documents required to make the progress payments (e.g., Council approved all plans, insurances, FHOG approval, builder receipts for deposit).
  3. The progress payment team will also calculate any extra funds you will need to pay the builder before the bank will start making payments. All of your contributions towards the construction ned to be paid first.
  4. Once this process is complete, the bank will issue a commencement letter to the builder so the builder can go to the site. 
  5. Once the slab is poured, the builder will send you an invoice for the first construction payment (please note you would have already paid the 5% deposit prior to this), all applicants of the loan will need to sign the invoice and forward to us. Some lenders also have progress payment forms that need to be signed and sent in with the builders invoice. 
  6. When all other invoices for progress payment claims get sent to you, please sign and forward to us to arrange paymen by the lender ASAP. Please note most builders have strict 7-day terms for these payments to occur. If the payments take longer than this, you could incur penalty interest as per your building contract (check term details).
  7. Before the bank will make the first and last progress payments, they will require a valuation. You should expect this payment to take at least 5 working days depending on the valuers access to the site and the banks progress payment queue.
  8. All other progress payments should occur within 72 hours of the bank receiving the signed progress claim.

Why go with the construction loan brokers at ZEP Finance

Whether or not you need construction loans for renovations or building a new home, they usually have the same loan terms with a standard home loan. But as a special type of home loan, it offers many advantages not accessible with conventional mortgages.

Best rate

We will research the market, compare rates from various banks and lenders, and negotiate for the best loan that suit your needs on your behalf

Stress less

We do everything for you! We believe borrowers should be able to enjoy a simple application process simple. Relax as we manage the paperwork for you from application right through to settlement.

Expert advice

You have us at your disposal for any of your questions about the loan process. Your current financial situation will be assessed, and we’ll provide expert advice on how best to achieve that building goal.

110+ Google Reviews And Counting

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Mal RiddleMal Riddle
06:31 08 Apr 24
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04:38 05 Apr 24
I'd heartily recommend Kylie and the team at Zep for your mortgage needs.
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04:28 05 Apr 24
I'm a property investor with 6 properties thanks to this family run brokerage business. I have had nothing but exceptional service from Zep finance. They don't cross-collateralise, work closely with your accountant and are so smooth and easy to work with.Zains team consider well over 100 lenders to come up with the right loan product for investors. These guys do the hard yards and I could not recommend them more.
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01:26 05 Apr 24
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03:59 04 Apr 24
The team at Zep were so incredibly helpful and made buying our first home not as stressful 10/10 recommend
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06:18 02 Apr 24
The team at Zep have been amazing.We had a more difficult settlement and each of the team gave me time, clear direction each step of the way and were extremely patient.Many thanks!!!Highly recommend
CarlieneCarliene
23:22 25 Mar 24
Zain is absolutely fantastic. He helped us with the refinance of our first home to help us buy our dream large acreage property nearly three years ago. Coming off our fixed loans, Zain is now helping us keep our new variable rates as low as possible. He’s been of tremendous help during the process each time. Highly recommended!
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08:01 24 Mar 24
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Paul ChafferPaul Chaffer
23:19 20 Mar 24
Kylie Harris, my broker was excellent in her approach and assistance. She was clear, concise and made it an effortless, streamlined process unlike other experiences I have personally had refinancing property. I felt trust, care and guidance from her and the team upon every step, delivering a great outcome. I have since produced two more leads for her with long term friends who were equally impressed.
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23:17 20 Mar 24
Fantastic Team!! Second to none!!
Michael WolhuterMichael Wolhuter
23:19 01 Mar 24
ZEP took the time to explain the home loan process to making it stress free. They were always there to help when needed, wound highly recommend Zain and the team.
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05:17 29 Feb 24
We had such a straightforward, no problems process with Zep. Communication was clear and consistent and the staff were all friendly and accomodating. Thank you!
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09:21 22 Feb 24
Zain and the team have helped us with loans, refinance and financial advice. They are unbelievable and easy to deal with. Call them now!
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06:36 22 Feb 24
Zain and the team were great. All the way from initial contact to past our settlement date to make sure the whole process was smooth.Dealing with Karina and Trudy they made everything hassle-free and had great communication at all times. 11/10, highly recommend.
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03:44 20 Feb 24
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11:00 15 Feb 24
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22:31 13 Feb 24
We have been very happy with the service provided by Kylie and the rest of the team at ZEP finance- they've ensured a very smooth journey for our refinance and property purchase. We've already recommended them to friends and family
Matthew GordosMatthew Gordos
11:43 11 Jan 24
ZEP Finance helped us throughout the process of selling and purchasing our homes by ensuring that paperwork and communication with our finance institutions was completed under tight timeframes
Ash KnowlandAsh Knowland
19:40 18 Dec 23
Zep finance helped us achieve what we were trying to do when no other brokers could. The whole experience was met with an extremely helpful and positive mindset with nothing ever being a problem.The addition of incredibly helpful staff made our experience with zep one that we will highly recommend to anyone looking to refinance like we did.Give Zain and the team a call, you won't be left disappointedAsh
Belinda KehoeBelinda Kehoe
04:27 18 Dec 23
Great service again from zep finance.Could not recommend them highly enough.
Dani ThompsonDani Thompson
03:19 12 Dec 23
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Paul OPaul O
23:51 05 Dec 23
Zain and the team at ZEP Finance are incredibly responsive to any questions and are genuinely customer-focused. They invest the time to get to know their clients and develop long-term relationships with them. It's comforting to know that expert advice and any assistance is only ever a phone call or email away. Over the past 5 years, I've found that they always act in the client's best interest and nothing is ever too difficult for them whether it be assisting with identifying the best lender for your needs, renewing loans or purchasing a home. They just make it happen!
Sorayah ZazuriSorayah Zazuri
04:08 14 Nov 23
Zain, Emma and the whole team at ZEP finance have done an amazing job. They successfully navigated us through our construction loan, and then onto refinancing to get us a better home loan with a reduced interest rate. We’ll done guys! You have taken a huge weight off of our shoulders. We look forward to dealing with your amazing, local, Lennox Head, family run business for any new mortgage needs!
Greg PowellGreg Powell
21:29 07 Nov 23
Zain and his team are friendly, efficient and professional. We have used ZEP’s services on a few occasions and I can not speak highly enough of them. They are patient and understanding and go above and beyond any expectations you may have. No hesitation in giving 5 stars plus…. Your emergency is their urgency. Fast and easy.
Shannon SayeShannon Saye
23:26 31 Oct 23
Highly recommend using ZEP Finance they made the process of getting finance easy and completed the process quickly and efficiently.
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03:34 10 Oct 23
Zain and the team at ZEP Finance came recommended when we started looking at buying near Lennox and needed financing. Zain was able to assist us in getting the best solution for our mortgage. The team was incredibly attentive, responsive with any queries we had along the way and professional. They made the process seem as seamless as can be considering the current lending context. A big thank you Zain, Trudy and Kelly for your expertise and support, we will certainly recommend your services.
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11:14 03 Oct 23
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07:17 11 Sep 23
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SALT GYPSYSALT GYPSY
00:35 26 Aug 23
We were recommended Zep Finance by friends of ours. Zain, Emma and the team met and exceeded our expectations and we couldn’t recommend highly enough. This was our first home loan experience and their communication was always prompt and clearly explained which made the whole process as straightforward as possible for us. Thanks so much for your perseverance and dedication to finding a home loan solution for us guys, really appreciated!
Jade RogersJade Rogers
09:28 25 Aug 23
Brett WatsonBrett Watson
05:01 14 Aug 23
Kylie Harris from Zep helped me throughout the process and was amazing in my opinion, I have already recommended Zep to friends .
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Andro EngelbrechtAndro Engelbrecht
00:12 25 Jul 23
Fantastic service once again! We've used Zain and the team from ZEP Finance for our past mortgages and recently to extend our current home loan to get some renovations done. Zain and his team was excellent at communication and did everything in a timely manner. Highly recommend and will definitely use them again in the future.
Hong KHong K
13:03 05 Jul 23
Zep finance is truly amazing and will help you achieve the best result. As a first home buyer, I am not sure about the process but my broker Kylie and Karina have always been very helpful, always kept me informed throughout the process and went above and beyond to assist until it is all completed. It was an amazing experience I couldn’t have done it without ZEP Finance !!!
Louise HarrisLouise Harris
10:41 11 May 23
Zep finance seamlessly managed our recent refinancing and made the whole process so easy for us. The whole team are friendly, professional and very thorough. They were also amazing to deal with a few years ago when we were first home buyers navigating a construction loan. Highly recommend!
Thomas HarrisThomas Harris
04:30 10 May 23
Zain and the ZEP team helped us get our initial home loan in 2019 and have just assisted us with refinancing. Great team, happy to answer all questions and a smooth process. Would recommend to anyone, near and far - we work with team from Western Brisbane without any dramas!
Jean BarrJean Barr
10:40 19 Apr 23
Made it easy for me to get my house loan. The staff were all very professional and made the whole process much easier and smoother. I would never have been able to settle on my purchase so quickly had I not had the team behind me. Everything was clearly explained to me. They took the stress out of the whole process.
Pip CPip C
10:24 19 Apr 23
Zain and his team did a wonderful job securing me a home loan and helping me understand the steps involved. They communicated with all the necessary parties on my behalf and l couldn't have been happier with the work they did for me. I highly recommend ZEP finances. Many thanks Zain, Kylie, Lisa and all the team.From a happy first home owner!
Louise O'ConnellLouise O'Connell
08:32 30 Mar 23
Zep Finance are world class! This was my 6th mortgage and by far the best advice and all round service I've ever experienced. Kylie went above and beyond to find me the best deal, with Trudy, Emma, Jasmine and Caitlin keeping me informed along the way. Thanks ZEP! I really appreciate the great loan you negotiated.Highly recommend this team!
Demi KroehnertDemi Kroehnert
01:23 28 Jan 23
Amazing experience for first home purchaseZEP Finance we’re excellent in making our fist home buying experience simple. Our broker, Joel, provided an awesome experience when purchasing our very first home and wer were able to purchase the home of our dreams. Throughout the whole process, Joel always communicated with us clearly and answered any questions we had, making sure we understood. Thank you to Joel and ZEP finance for providing us with a great experience and we will be sure to return when we need a broker in the future.
Brad NewbyBrad Newby
22:20 27 Dec 22
The team at ZEP Finance were very professional throughout the whole loan process and provided us with several options that suited our circumstances. Not living local was not an issue for them and the communication provided from the ZEP team was amazing. If you are looking for a service which is tailored to your specific needs we highly recommend reaching out to Zain and his team. Thanks for helping us achieve another milestone in our lives.
So grateful for Zep Finance.There are few words that can explain our gratitute to Zain and Joel.The brokerage service was excellent from beginning to end in assisting us to secure our very first home.Zain and Joel made us feel valued and informed each and every step of the way on our journey to owning our own home.We can't thank them enough for their exceptional, meticulous, professional and efficent assistance and support.If you are looking for a broker, we can absolutely recommend Zep Finance and will continue to use their services in the future!From the Myburghs.
Abbey McBurneyAbbey McBurney
23:37 20 Oct 22
Third time - Still Amazing ServiceThis was our third time working with ZEP Finance. The whole team supported us through a very difficult process negotiating with our previous lender following the February/March floods. We would have been lost without their support.They then switched gears and sprung into action to get us locked and loaded to buy a new, flood free home.Joel helped us obtain pre-approval with our preferred lender and the whole process from exploring options to pre approval to settlement was seamless and stress free.Zain has built a quality and caring team, whose attention to detail and customer service is hands down second to none.I have always, and will continue to recommend ZEP to anyone looking into finance options.
The Image CollectiveThe Image Collective
05:22 04 Oct 22
Highly recommend the entire team at ZEP to anyone needing finance information or services. The results were nothing short of amazing. This experience for me has restored my reservations about loans/finance with their professionalism and knowledge. I understood everything that was explained, was given options and felt so empowered to leave my long term bank.I have since referred family and friends to see them and hope anyone reading this gives them a go. Trust me, you won't be disappointed. THANK YOU ZEP!!!
Nat DaleyNat Daley
00:18 02 Aug 22
Second to noneOver many years and many transactions, Zain Peart and his team (Kylie, thank you) have always been great, but this time they went above and beyond. Our situation is complex, the investment property transaction we just executed was complex, and what was even more complex was the timing of the transaction (floods, COVID-19, interest rate increases, maternity leave, personal matters etc). ZEP provided much needed stability in these uncertain times. There is nothing that office cannot do, and it seems the more complex the scenario the more they stand out. I cannot recommend ZEP highly enough, and do to my family, friends and clients 100% of the time.
Wan BradridgeWan Bradridge
10:06 11 Jul 22
Amazing service! Zain, Kylie and the team went above and beyond for us. They made the process so easy. They did all the hard part for us, we didn’t even have to lift a finger! Always keeping us up to date with the progress of the loan application, very professional and friendly. We would recommend the team to anyone! Thank you guys! Craig and Wan
J CJ C
10:03 11 Jul 22
I couldn't have asked for better service! Zain, Jasmine, Emma and the entire team at ZEP worked around the clock to find the best possible loan for my situation.If you're looking for a professional, timely, considerate and understanding broker, ZEP is my recommendation. Jasmine always replied to my requests quickly and efficiently and Zain worked tiressly to find the product just for me.
Sally CookSally Cook
10:02 17 May 22
PROFESSIONALSERVICE AND GREAT COMMUNICATION !!Zain, Joel and his team were extremely helpful, responsive and gave us excellent advice throughout the process of obtaining our loan and securing a home in this difficult property market. Their service was sincere and supportive and we would highly recommend to anyone to use their services. We will most definitely reach out to them once again for any further loan applications. These guys made it all happen !!! THANKS HEAPS
Helen WoodburnHelen Woodburn
00:55 15 Jan 22
Buying and selling property can be stressful so having someone assist us with our financing towards the selling and buying of a property was very important to us. Zain at ZEP Finance came highly recommended. Both Zain and his team did an incredible, efficient and professional job from start to finish. Zain's knowledge and experience is exceptional which instilled our confidence and trust. The team's communication was outstanding and their timely and prompt attention to detail provided comfort and peace of mind throughout the process. This meant we could focus on other necessities associated with moving house as well as saving us a heap of time. We would highly recommend Zain and ZEP Finance to anyone requiring a mortgage broker.
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