Construction loans release funds in approved stages as the property is built, making document timing and contribution management important.
The usual stages
Stages commonly include deposit, slab, frame, lock-up, fixing and completion, though the contract and lender process can differ.
Your contribution may be used first
Depending on approval and structure, the borrower may need to contribute funds before lender drawdowns commence. Confirm the sequence early.
Requesting a progress payment
The lender may require a builder invoice, borrower authority, inspection and confirmation that work aligns with the approved contract.
Variations and cost overruns
Changes can affect valuation, loan amount and required contribution. Maintain a contingency and discuss material variations before committing.
Common questions
Do I pay interest on the full construction loan from day one?+
Generally interest is charged on amounts drawn, subject to the loan terms.
What happens at completion?+
The lender commonly requires final documentation and inspection before the last payment and transition to the ongoing loan.
This guide does not consider your objectives, financial situation or needs. Lending policies, government programs and thresholds can change. Obtain current credit, legal, tax or financial advice as appropriate.