Construction loans
Construction loans for the build, staged like the build.
A construction loan isn't a home loan with a different name. It pays your builder in progress payments, charges interest only on what's drawn, and lives or dies on the paperwork: fixed-price contract, plans, and a lender who's comfortable with your builder.
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- Progress payments matched to the build stages: deposit, slab, frame, lockup, fixing, completion
- Interest-only on drawn funds during the build, converting to a standard loan at completion
- Lenders matched to your build type: house and land, knock-down rebuild, owner-builder appetite varies
How a construction loan actually works.
The lender approves the total (land plus fixed-price build contract), then releases money to your builder in stages as work completes: typically five drawdowns from slab to completion, each after an inspection. You pay interest only on what's been drawn, so repayments start small and step up as the build progresses. At handover the loan converts to a normal home loan, and that conversion moment is when we make sure the rate is sharp.
What lenders want to see.
The approvals that go smoothly all have the same file:
- A fixed-price building contract from a licensed builder (owner-builder is possible but the lender pool shrinks)
- Council-approved plans and specifications
- Quotes for anything outside the contract: pools, landscaping, driveways
- A valuation that supports land plus build cost ('as if complete')
The progress payments, stage by stage.
Queensland builds run to a standard rhythm, and the loan drawdowns follow it: deposit to the builder, then base (slab down), frame, enclosed (roof on and lockable), fixing (kitchens, bathrooms, internals) and practical completion. At each stage the builder invoices, the lender inspects or values, and payment goes straight to the builder, usually within about a week of the claim.
Two practical notes. First, the lender spends your own contribution on the build before touching the loan, so your deposit goes early; plan cash flow around that. Second, watch that claims match the contract schedule: paying ahead of work done is how builds go wrong, and the lender's inspections are a protection, not a formality.
Timeframes, honestly.
Expect the finance to take a little longer than a standard purchase: the valuer needs plans, specifications and the building contract to produce the 'as if complete' figure, so allow two to four weeks from complete file to approval. The build itself commonly runs six to twelve months for a standard home, longer for knock-down rebuilds with demolition and site works up front.
During construction your repayments are interest-only on the drawn balance, stepping up as stages complete. Budget for the overlap if you're renting while you build: rent plus growing interest is the squeeze period, and it's the number we stress-test with you before you sign anything.
New build? Don't leave the grant behind.
New builds in Queensland can qualify for the $30,000 First Home Owner Grant and, for eligible buyers, the First Home Guarantee's 5% deposit path. If it's your first home, the grants and the construction loan need to be sequenced properly; the grant can even form part of your deposit at some lenders.
Common construction finance mistakes.
Nearly every construction headache we untangle started as one of these:
- Signing the land contract before knowing the whole package (land plus build) stacks up with a lender
- A contract price with no contingency: variations happen on almost every build
- Leaving site costs, driveways, landscaping and pools out of the borrowing, then funding them on credit cards
- Upgrading finishes mid-build through variations the loan wasn't sized for
- Letting the loan roll to an uncompetitive rate at handover instead of repricing at conversion
Your broker, not a call centre.
Hugh, Callum and Jacob write every loan themselves: the person who meets you is the person who structures the deal, drives the approval and reprices your rate every six months after settlement. That's why 261 Google reviews name them personally.
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The reviews page →Verify on Google →Callum and the team were fantastic to deal with every step of the way. As first home buyers we really appreciated Callum's simple explanations of each part of the process and we couldn't be happier with the result.
Seamless experience dealing with Hugh and the Link Advance team to refinance our home. Thank you!
Jacob and the team at LINK Advance made buying our investment property quick and painless. Would recommend
We’ve just bought our first home with the help of Callum and the team at LINK, and we couldn’t be more grateful. Callum went above and beyond, kept us informed every step of the way, and made the whole process feel easy and stress-free. Highly recommend!
Hugh has been amazing throughout the process of buying our new house. He is very approachable and knowledgable and went above and beyond what we expected to help us out. Thanks so much Hugh!
Jacob was an efficient mortgage broker. The process was made simple and constant updates were communicated. Any questions asked were responded to timely. Highly recommend Jacob.
Building a house can be so stressful and overwhelming let alone dealing with the finance aspect of it, however with Callum it has been the exact opposite. He has been so patient and extremely helpful throughout the whole process. Highly recommend!
Hugh Dellit was fantastic to work with and truly understood our needs when it came to applying for our first home loan. I would highly recommend him for his professional, kind and friendly service.
Jacob provided informative and friendly service every step of the way. He was a great comfort to us as first home buyers as we knew we were in good hands. Thanks for all of your help Jacob!
Hugh and the rest of the team were excellent at securing us a home loan. Knowledgeable, friendly, very communicative and made the entire process stress free and easy. We can’t recommend Hugh and the rest of the team at Link Advance enough.
Frequently asked questions.
How much deposit do I need for a construction loan?
Generally the same as a standard loan: 20% of the total (land + build) to avoid LMI, less with LMI or the First Home Guarantee for eligible first-home builders. Land you already own counts toward equity.
Do I pay full repayments during the build?
No. You pay interest only on the amount drawn so far. Repayments step up with each progress payment and convert to normal principal-and-interest at completion.
What if the build goes over budget?
Variations outside the fixed-price contract are yours to fund, which is why lenders (and we) want contingency in your numbers from day one. Significant overruns mid-build can require a loan variation, which is manageable, but far easier if the buffer was planned.
Can I get a construction loan as an owner-builder?
Some lenders will, with lower maximum LVRs and more scrutiny. The panel matters a lot here. It's exactly the kind of niche where a broker earns their keep.
Can I buy the land now and build later?
Yes. A land loan settles the block first, and the construction loan follows when your plans and fixed-price contract are ready. Two cautions: land-only lending is often capped at lower LVRs than a house-and-land package, and some grant and duty concessions carry build-commencement time limits, so the sequence needs a plan rather than a vibe.
What is an 'as if complete' valuation?
The lender values the finished product (land plus the completed build per your plans and contract) before a slab is poured, and lends against that figure. If the valuation comes in under land-plus-contract cost, the gap is yours to cover, which is why we sanity-check the numbers against comparable sales before the application goes in.
Do construction loans cost more than normal home loans?
During the build you're usually on a variable rate paying interest only on drawn funds, so the dollar cost starts small and grows with the build. Some lenders price construction slightly differently until completion. The bigger cost lever is what happens at handover: we reprice or restructure at conversion so you land on a sharp ongoing loan rather than the default one.
What happens if my builder goes broke mid-build?
The scenario everyone fears, and Queensland has real protections: residential work by licensed builders is covered by the QBCC's Home Warranty Scheme, which can cover non-completion up to scheme limits. The lender pauses drawdowns while a replacement contract is arranged, then reassesses. Disruptive but recoverable. Unlicensed building work, by contrast, is the thing never to touch.
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