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Construction Loan

Construction loans fund new home builds or major renovations by releasing money in stages as your builder completes work, rather than a lump sum upfront. 

What Is Construction Loans?

Building your dream home or major renovation is exciting but complex – especially the finance side. A construction loan (also called a building loan) spreads funding across build stages (slab, frame, lockup, completion) so you only pay interest on what’s been drawn down, keeping costs lower during construction. Mortgage Companion coordinates with your builder, council and lender to make the process smooth from plans to Practical Completion.

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How construction loans work?

Unlike standard home loans, construction finance follows your builder’s progress with progressive drawdowns – typically 4–6 stages over 6–12 months:

  1. Land purchase (if not already owned)

  2. Slab down (foundation/pads complete)

  3. Frame stage (walls/roof framed)

  4. Lockup (roof/windows/doors weatherproof)

  5. Fixing stage (internal walls/electrical/plumbing)

  6. Practical Completion (ready to occupy, defects fixed)

Your lender inspects each stage before releasing funds to your builder. Interest is interest-only during construction, converting to principal + interest once you move in.

Key Requirements

Lenders need to see a solid plan before approving construction finance:

  • Council-approved plans, permits and engineering reports

  • Fixed-price contract with a licensed, insured builder

  • “As-if-complete” valuation showing finished value exceeds loan

  • Proof of land ownership or land loan approval

  • Minimum 5–10% deposit (lower for first home buyers via schemes)

  • Serviceability buffer for construction interest + post-build repayments

Construction loans max out at 80–95% LVR depending on your situation.

Refinancing Options We Assist With

Beyond standard home loans, we help clients at every stage of property ownership. 

Rate Reduction Refinance

Switching to a lender offering a lower interest rate is the most common reason to refinance. Even a 0.25% rate cut on a $500k loan can save $1,000+ per year. We compare your current rate against the market and calculate the exact savings after fees to confirm it’s worthwhile.

Equity Release Refinance

If your property value has grown or you’ve paid down principal, you may have unused equity available. Refinancing lets you borrow against this for home improvements (which can increase value further), new investments, helping family with deposits, or other goals – without selling your home.

Cash-Out Refinance

This is equity release specifically for larger, defined projects. Borrow extra above your current balance (subject to LVR limits) to fund renovations, purchase an investment property, buy a car, or consolidate other debts. Lenders assess your serviceability and the purpose of the funds.

Term Shortening Refinance

Instead of lowering repayments, keep a similar monthly amount but shorten the loan term from 30 to 25 or 20 years. This dramatically reduces total interest paid over the life of the loan, helping you own your home outright years sooner.

Debt Consolidation Refinance

High‑interest credit card balances (20%+), personal loans or car loans can be rolled into your mortgage (typically 5–6%). This simplifies payments into one lower monthly amount and can save thousands in interest, provided you avoid re‑accumulating consumer debt.

Why Australians Choose Mortgage Companion

Tailored Advice

We don’t believe in one‑size‑fits‑all lending. Your goals, lifestyle, and financial situation shape our recommendations.

Access to multiple lenders

We compare loans from major banks and specialist lenders to find options that suit your situation, not just one brand.

Local & national knowledge

We understand the Australian lending landscape and how policies vary between lenders.

Support from start to finish

You deal with a real broker who stays involved until the loan settles and beyond.

Proven Client Satisfaction

100% recommendation rate from reviews, with clients highlighting our dedication and outstanding results.

Long-term guidance

We check in over time to make sure your loan still suits your needs as rates and circumstances change.

Now It's Your Turn

Most Trusted Mortgage Broker in Perth

With a track record of satisfied clients and trusted advice, we’re committed to helping you achieve your financial goals with confidence.

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Frequently Asked Questions

Answers to common questions about our services, how we work, and what to expect at each stage.

Construction loans release funds in stages as your builder completes work. You only pay interest on money drawn down, not the full amount upfront. They convert to a standard P&I loan once building finishes.

Typically 5–10% deposit plus extra costs. First home buyers can access 95–100% LTV via schemes like FHOG + HELP debt inclusion. Lenders cap at 80–90% of completed value.

4–8 weeks. Extra time needed for builder approval, council checks, engineering reports and “as-if-complete” valuation. Start early before signing your building contract.

Yes, but lenders assess builder experience, licensing, insurance and financial stability. Some require panel builders or volume bonuses. We help match your builder with lender requirements.

Your loan converts to a permanent home loan (principal + interest). You arrange final inspection, occupancy permit, and start regular repayments. No need to reapply if structured correctly.

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