Construction Loans Perth
Building a new home or undertaking major renovations requires specialised lending. Perth Home Loan Broker connects you with brokers who understand construction finance and can guide you through the progress payment process.
How Construction Loans Work
Construction loans differ from standard home loans:
Progress Payments
Instead of receiving the full loan amount at settlement, funds are released in stages as construction progresses:
- Slab/Base stage - After foundation completion
- Frame stage - After structural framing
- Lock-up stage - After external walls, roof, windows, doors
- Fixing stage - After internal fit-out
- Completion - Final payment after handover
Interest During Construction
You only pay interest on funds drawn, not the full loan amount. This keeps costs lower during the building phase.
Fixed Price Contracts
Most lenders require a fixed price building contract before approving construction finance. This protects both you and the lender from cost blowouts.
Types of Construction Lending
New Home Construction
Building on vacant land or a house and land package:
- Land loan converts to construction loan
- Or combined land and construction facility
- Progress payments to registered builder
Knockdown Rebuild
Demolishing an existing home to build new:
- Finance covers demolition and construction
- Often on existing owned land
- May access equity from existing property
Major Renovations
Significant structural works or extensions:
- Construction loan for renovation component
- Progress payments for major works
- Different to standard home improvement loans
Construction Loan Considerations
Builder Requirements
Lenders have specific requirements for builders:
- Registered and licensed builders
- Appropriate insurance coverage
- Fixed price contracts preferred
- Some lenders have approved builder panels
Valuation Process
Construction loans require:
- As-is valuation - Current land/property value
- On-completion valuation - Projected value when built
- Loan based on the lower of cost or completed value
Contingency Planning
Building projects can encounter unexpected costs:
- Soil conditions requiring additional work
- Material price variations
- Design changes during construction
Your broker can help you understand how lenders handle variations.
Connect with a Construction Finance Specialist
Tell us about your building project and we’ll connect you with a broker experienced in construction lending. They can help you understand the process and find the right lender for your situation.
Call: 08 5122 5626 Email: loans@perthhomeloanbroker.com.au
