Construction Loan
A Construction Loan helps to minimise your mortgage repayments until your new home is completed, takes control over payments to the builder, and will revert to a normal home loan when your property is completed.
A Construction Loan is designed to be drawn down in stages as your property is being built. This results in your monthly mortgage repayments gradually increasing as construction progresses until the building is finished, avoiding high home loan repayments upfront. There are five drawdowns for a Construction Loan. These are generally:
Slab down – 15% of total construction cost
Frame up – 25% of total construction cost
External brickwork completed – 20% of total construction cost
Lock-up stage – 20% of total construction cost
Practical completion – 20% of total construction cost
Please note that these may vary depending on your builder and your building contract. Until construction is complete mortgage repayments are generally interest-only after which they may become principal and interest or remain interest-only. Mortgage repayments can be made fortnightly or monthly from your nominated bank account either by direct debit or direct salary crediting. The interest-only portion is available for up to five years.