Construction Loan

Building your dream home is an exciting journey but financing it is different from buying an established property. With a construction loan, funds are released in progressive payments at each stage of construction, instead of as a single lump sum. This ensures your builder is paid as work is completed and gives you more control over costs.

How Construction Loans work?

Your builder issues an invoice at the completion of each stage
You approve and sign the invoice
The bank or lender pays the builder directly on your behalf

This staged approach makes sure payments align with construction progress and reduces financial risk

Costs involved in Construction Loans:

Just like regular home loans, construction loans come with certain fees and charges that vary across lenders. Some of the common ones include:

Establishment Fee – One-time fee for setting up the loan
Settlement Fee – Payable when the property officially settles
Progressive Drawing Fee – A fee charged each time funds are drawn during construction (usually collected with the final drawdown)
Annual Package Fees – Some lenders charge annual fees that may include extras like credit cards
Other Fees – Additional charges may apply, which we’ll explain when helping you select the right lender and product

Stages of Construction:

A typical home build involves five main stages, each requiring a progressive payment:

Slab Stage (15–20%)
Foundation slab is poured. This includes any initial deposit already paid
Frame Stage (20%)
External frame and walls, roof supports, plumbing and electrical conduits are built
Lock-Up Stage (20%)
Doors, windows, and roof are installed, allowing the property to be secured
Fit-Out Stage (20%)
Internal fixtures and fittings are completed, including lighting, plumbing, power points and cabinetry
Completion Stage (10%)
Final touches such as painting, flooring, fencing and clean-up are done before handover

Flexibility of Construction Loans:

Interest-Only Payments: During the construction phase, repayments are usually interest-only, which keeps your monthly repayments lower until the property is finished
Tailored Funding: You only pay interest on the funds drawn not the full loan amount from day one

Key Things to Remember:

Price Variance: Building costs may increase due to material price rises. Always allow a buffer and have your contract reviewed by a solicitor
Timing: Lenders typically require construction to start within 6 months of loan approval and be completed within 24 months

Book a consultation with Oracle Ezy Finance today

Oracle Ezy Finance is your trusted mortgage broker in Epping and nearby suburbs helping individuals, families and businesses secure the right home loans, investment loans, commercial finance and personal loans with ease. We make lending simple, transparent and stress-free