Construction Loans
Getting a construction home loan in Sydney
A construction home loan is a type of financing specifically designed for individuals like you or entities who are building or undertaking major renovations on a property.
Unlike a regular home loan where the full amount is disbursed at once, a construction loan is typically drawn down in stages. This means you only pay interest on the portion of the loan you’ve used.
In Sydney, lenders typically require a fixed-price contract from a licensed builder and will evaluate the builder’s qualifications, building plans, and property valuation to determine the loan amount. As construction advances, funds are released in “progressive drawdowns”, with lenders verifying each stage’s completion.
Once construction is finalized, the loan usually shifts to a standard home loan format, leading to regular principal and interest repayments.
To make sure that you’ll get the most suitable loan for your needs, speak with our expert brokers!
How can you benefit from construction home loans?
Staged Funding
With construction loans, you borrow money in parts as the building progresses. This means you're only borrowing when you need it, potentially saving you money.
Interest-Only Payments
While building, many lenders let you pay just the interest, meaning lower payments than if you were repaying the borrowed amount too.
Flexibility
Construction loans are tailored for building, offering leeway for any changes or unexpected delays during construction.
How much will it cost you build a home?
Your owner-occupied home loan repayments
Your estimated repayments:
Principal and interest periodComparison rate:
Total interest payable: 6.14% p.a.
6.14% p.a.
$571,628
Things to consider before getting a construction home loan
Certainly, as with any loan, construction home loans come with their own set of risks for borrowers. Here are some of the primary concerns:
Cost Overruns
Building projects can sometimes go over budget due to unforeseen complications, material cost increases, or changes to the original plan. If the loan amount doesn’t cover these extra costs, you’ll need to find additional funds elsewhere.
Construction Delays
Delays can arise from bad weather, contractor disputes, or permit issues. A prolonged construction period could increase the total interest you’ll pay during the interest-only phase or even lead to higher costs.
Change in Financial Circumstances
If your financial situation changes during construction (e.g., job loss), you might find it challenging to manage the loan, especially when it converts to principal and interest repayments.
Interest Rate Changes
Since construction can take a significant amount of time, there’s a possibility that interest rates might rise during the build. If you haven’t fixed your rate, higher rates can increase your repayment amounts.
Lower Final Valuation
At the end of construction, the property might be valued lower than expected. This could impact your loan-to-value ratio (LVR) and might require you to pay lender’s mortgage insurance or find additional funds.
End of Interest-Only Period
Once construction is completed, the loan often switches from interest-only payments to principal and interest. This transition can lead to a significant jump in monthly repayments, which you need to be prepared for.
With 50+ lenders at your fingertips, you have the power of choice
When you set out on your own seeking a loan, banks have the power to reject you. But with us on your side, it’s the other way around. We choose the most suitable loan for your unique needs.
You’re only 3 steps away from your financial goal
Step 1
Reach out to us and let’s discuss your situation and what kind of loan you need.
Step 2
Sit back and relax while we search our network to find the perfect loan for you.
Step 3
Choose the best loan that suits your needs. Then we’ll submit a foolproof loan application to secure your financing.
Why Lend & Loan
10 years of experience
We’ve been doing this for a decade, so we’ve built strong connections with lenders and we know their lending policies inside out. This helps us find the right loans that suit your needs.
One-touch approvals
We know exactly what banks and other lenders require from the get-go. We’re experts at putting together foolproof loan applications that lenders approve without further questions.
Accessibility
We’re not like your typical 9-5 mortgage brokers. You can reach us when you need us, and we’ll get back to you within four hours.
Efficient processes
We understand that you’re busy, so we keep things simple. We try to avoid in-person meetings to save you time and make the loan process easy and stress-free.
Don’t take our word for it, take theirs.
We’ve helped hundreds of Australians
get approved for a loan and achieve their financial goals. Hear it from our
happy clients.
John has been absolutely brilliant! Helped me all the way through the application process and explained everything step by step. Great to have him in my corner navigating through interest rates, products, etc. Thank you!
- Peter Hanna
John and the team at Lend & Loan have been great through the process of our loan application. They were very responsive and always made my wife and I confident we were in the right hands. Highly recommended.
- Luke Saide
John from Lend & Loan was incredible during the process of buying our first home. He was very professional, quick at responding and was happy to answer any questions we had. I would highly recommend him to all my friends & family.
- Rachelle Obierzynski
John has been amazing to deal with from the beginning. He has been extremely patient, professional and optimistic throughout the whole process with our application and we can’t thank him enough for all his hard work! Highly highly recommend him. Thank you again!
- Maryanne Layoun
