Building a home should be one of the most exciting times in your life but it can also be one of the most stressful. From deciding how many bedrooms you’ll have to determining where you’ll install power points, the last thing you want to worry about is getting the finance sorted.  

That’s why it pays to work with a lender who will simplify the process, so you can focus on what matters most - your new home.

To help you get started, here’s our short guide to construction loans and what you can expect.

What is a construction loan?   

A construction loan is a type of loan that is used to pay for the cost of building a new home.

What makes it different from a standard home loan is the payment scheme. Construction loans allow you to draw down the loan in stages as the construction progresses.

These progress payments are paid directly to the builder after each stage of construction. The usual stages of construction are:

  1. Finance approved
  2. Slab
  3. Frame
  4. Lock-up
  5. Fit out
  6. Completion

This helps you monitor the build and ensures that you’re only paying for work that’s been completed.

As construction loans are progressively drawn down, you only pay interest on the money that you use. For example, if $150,000 has been drawn down on a $300,000 loan at the frame stage, you’d only be charged interest on $150,000.

What does the process look like?

The complexities of building a new home can be overwhelming. To simplify the process, here’s an overview of the most common stages of the construction loan journey.

Stage 1: Finance approved

  • Our Lending Specialists will help you determine your borrowing capacity and assist you with getting pre-approval for your loan
  • You’ll need to supply documents as part of this process, such as building plans and permits, a copy of your fixed-price building contract and builders’ insurance
  • If you’re eligible for any government grants, you should apply for these now
  • An initial valuation is completed to determine the value of your property

Stage 2: Slab

  • Construction begins and foundations are poured
  • This is when the first progress payment is made and will be drawn from your initial deposit


TIP: It may be tempting to change your mind on your house plans or materials during construction but remember that any changes you make can affect the overall cost of your build and should be approved by us.

Stage 3: Frame

  • The exterior frame and walls are under construction
  • This is usually when the second progress payment is made and will be paid on invoice

Stage 4: Lock-up

  • The windows, doors, external walls and roof are installed to allow you to lockup your house
  • A progress valuation is completed to confirm construction is progressing as expected
  • This is usually when the third progress payment is made

Stage 5: Fit out

  • Internal fixtures such as power points, lights, flooring and other fittings are installed
  • This is usually when the fourth progress payment is made

Stage 6: Completion

  • Congratulations – you’re ready to move in!
  • A final valuation is completed, and a financial inspection and insurance certificate is provided before the final payment is made


We’re here to help

Download our complete construction guide at


Ready to build your own home?

Access our lowest rates, 100% offset and extra benefits with our Complete Package Home Loan.  Speak to our Lending Specialists on 1300 362 216 or visit to get started.