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Construction loans

The loan feature to build or renovate property. It helps to protect land in our Conservation Reserve, too.

What’s on this page

What’s it’s for

A construction loan allows you to build or renovate and pay the builder when key stages of the build are complete. 

How to access the funds

Unlike buying an established property – where funds are paid directly to the borrower – with construction loans we ‘disburse’ loan funds to the builder. Not all at once, but in line with the payment schedule in your building contract. 

As a guide:

  1. Deposit
  2. Base or slab
  3. Frame
  4. Lock-up
  5. Fixtures
  6. Completion

How much could you borrow?

Subject to our normal lending criteria, we can look to lend you up to 90% of the estimated fully constructed value of your home. 

Construction loan deposit

Your deposit can come from equity in the vacant land or the building you’re renovating. Or, it can come from your own savings, a guarantor, or with the help of schemes like the First Home Owners Grant. 

Documentation to provide

In addition to the standard home loan documents like payslips, you will need to provide the following in relation to your build. 

  • Council-approved plans
  • Your fixed price building contract 
  • Builder's indemnity insurance (which you must pay)

Your plans and building contract help our valuer to estimate the fully constructed value of your home. Which in turn helps us figure out what you could borrow.

Before you apply

Your plans must be approved and a builder selected before we can move your application to formal approval. You can apply for pre-approval without these, noting that pre-approval is typically only valid for 3 months. 

Rates and features

You can apply for any Bank Australia home loan and use it for construction purposes. 

Compare all home loans

Repayments

Principal and Interest repayments apply to construction loans once we fund the first progress payment amount. 

You can request Interest Only repayments during your build period (up to a maximum period of 12 months) on our Premium Package Home Loan and Clean Energy Home Loan.

What your loan protects

Our construction loans have land protected in our Conservation Reserve that is equal to the size of each building lot. When you become a Bank Australia customer, you also become a part owner in this reserve.