Deposit Stage
An initial builder deposit may be required under the contract. Lender treatment depends on the approved loan structure and the borrower’s contribution.
Adelaide Construction Loan Specialists
Construction Loans for New Homes and Major Renovations
Finance a new home, land-and-build package, knockdown rebuild or substantial renovation with a loan structured around construction milestones. Capital Connections Finance helps coordinate lender requirements, progress payments, documentation and settlement.
Progressive drawdowns aligned to completed stages
New build, renovation and knockdown-rebuild options
Comparison across a 40+ lender network
40+ Lender Network
Bank and non-bank construction options
20 Years’ Collective Experience
Banking, mortgage and finance knowledge
End-to-End Support
Application, drawdowns and completion guidance
Understanding How a Construction Loan Works
A standard home loan commonly settles as one lump sum when an established property is purchased. A construction loan is different because approved funds are generally released progressively as eligible building stages are completed and invoiced.
This structure helps align the loan with the actual cost of work completed. During the progressive-draw period, borrowers commonly make payments based on the amount already advanced rather than the full approved construction limit, subject to the loan product and lender.
Because the property is still being created, lenders usually need more information than they would for an established-home purchase. This can include the signed building contract, approved plans, specifications, builder details, construction insurance, a progress payment schedule and a valuation based on the proposed completed property.
Typical Construction Loan Progress Payment Stages
Stage names and percentages differ between contracts and lenders. The builder generally invoices after completing an agreed milestone, and the lender reviews the request before releasing eligible funds.
Base Stage
Site preparation, footings, foundations, underground services and the slab or base are completed according to the approved plans.
Frame Stage
The structural frame, roof framing and other core structural components are erected and inspected where required.
Lock-Up Stage
External walls, roofing, windows and external doors are installed so the building can generally be secured.
Fixing Stage
Internal linings, cabinetry, plumbing, electrical work, fixtures, flooring and finishes progress toward practical completion.
Completion Stage
The final invoice, completion documents and any required final valuation or inspection are provided before final funds are considered.
Construction Loan Benefits and Important Considerations
The progressive structure can support cash-flow management, but the additional moving parts require careful planning and documentation.
Potential Benefits
- Funds are released in line with eligible completed stages rather than as one upfront construction payment.
- During progressive drawdown, interest is commonly calculated on the amount already advanced, subject to the loan terms.
- A purpose-built structure can support new homes, knockdown rebuilds and major structural renovations.
- The lender’s progress-payment process creates additional checkpoints throughout construction.
- The facility generally transitions into the ongoing home or investment loan structure after completion.
Important Considerations
- Construction applications usually need more documents and coordination than an established-property purchase.
- Delays, variations, site issues and material changes can increase the project cost or affect the build timeline.
- Rates, fees, valuation charges and repayment arrangements vary across lenders and may change.
- Out-of-contract costs may need to be paid from personal funds or funded differently.
- Additional lending for cost overruns is not automatic and remains subject to assessment and approval.
In-Contract and Out-of-Contract Construction Costs
Knowing exactly what the builder has included can reduce funding gaps and make the progress-payment process easier to manage.
Build a Complete Project Budget Before Applying
A fixed-price contract may not cover every item needed to complete and occupy the property. Landscaping, fencing, utility connections, driveways, retaining walls, site works, appliances and other items may sit outside the contract.
Lenders can treat excluded costs differently. Some items may need firm quotations, evidence of available funds or payment from the borrower before later loan funds are released.
Allow for a realistic contingency
The appropriate buffer depends on the project, contract and
your financial position.
| Commonly in the contract | Commonly outside the contract |
|---|---|
| Builder labour and contracted materials | Landscaping, turf and garden works |
| Foundation, slab, frame and roofing | Fencing, gates and retaining walls |
| Specified doors, windows and insulation | Driveways, paths and external paving |
| Contracted plumbing and electrical work | Some utility connections and authority fees |
| Specified cabinetry, fixtures and finishes | Pools, sheds and detached structures |
| Items expressly listed in plans and specifications | Upgrades, owner-supplied items and later variations |
Manage Building Variations Before They Disrupt Your Finance
A variation changes the agreed design, specification, price or scope of the building contract. Even a seemingly small upgrade can affect the project budget, remaining loan funds and completion valuation.
Put every variation in writing, confirm the revised price and payment timing, and speak with your broker or lender before committing to a material change. The lender may require updated documents, a revised cost-to-complete calculation or another valuation.
Document every change
Use a written, signed variation with a clear price.
Confirm the funding source
Know whether the variation is funded by cash or lending.
Allow for approval time
A further assessment can affect the construction schedule.
Protect the remaining budget
Maintain enough funds to complete all contracted work.
Types of Construction and Renovation Finance
The suitable structure depends on whether you already own the land, the scale of the work, who is managing the build and how the project contracts are arranged.
New Home Construction
Finance a new residential build under an approved fixed-price contract with progress payments released through construction.
New primary residence or investment buildLand and Build Package
Coordinate the land purchase and construction facility where the land and building contracts settle at different stages.
Separate or packaged land and build contractsKnockdown and Rebuild
Replace an existing dwelling with a new build while considering demolition costs, current mortgage arrangements and valuation.
Existing land with a complete rebuildMajor Renovation or Extension
Fund eligible structural work, additions, second-storey projects and significant renovations through progressive payments.
Structural work rather than minor cosmetic updatesOwner-Builder Finance
Specialist lending for eligible applicants managing their own construction, generally with stricter experience, equity and documentation requirements.
Limited lender availability and specialised assessmentPost-Construction Loan Review
Review the ongoing loan structure, repayments and features after the project is complete and the facility is fully drawn.
Ongoing home or investment loan managementConstruction Loan Document Checklist
Exact requirements differ between lenders and projects. Preparing the core documents early can reduce avoidable delays.
Documentation Changes Throughout the Build
Initial approval focuses on your financial position, land, contract, plans and proposed completed property. Progress payments then rely on invoices and evidence that each eligible stage has been completed.
Before final payment, the lender may require a final invoice, building insurance, occupancy or compliance documents and a satisfactory final inspection.
Check My Document RequirementsBefore Formal Approval
Income, assets and liabilities; land contract where applicable; signed building contract; approved plans and specifications; builder details; progress schedule; insurance; and quotations for excluded works.
During Construction
Signed progress payment requests, builder invoices, borrower authority, evidence of completed work and any additional documents or inspection reports requested by the lender.
Before Final Payment
Final invoice, building insurance, completion evidence, occupancy or compliance documentation where required and any satisfactory final valuation or inspection.
For Variations and Extra Costs
Signed variation documents, revised quotations, updated contracts, evidence of available funds and a revised cost-to-complete position where requested.
Our Construction Loan Process
We help organise the finance around the project so you understand the lender requirements before construction begins.
Review the Project
Discuss the land, plans, build type, contract status, estimated costs, deposit and desired loan structure.
Assess Borrowing Position
Review income, liabilities, living expenses, available equity and the funds needed for contract and excluded costs.
Compare Lender Policies
Compare suitable lenders, rates, fees, valuations, progress-payment processes and construction criteria.
Prepare the Application
Coordinate the financial evidence, plans, contracts, builder documents and valuation requirements.
Support the Build
Assist with lender communication, eligible progress-payment requests, variations, final documents and completion.
Why Work with Capital Connections Finance?
Construction finance requires more coordination than a standard home purchase. Our role is to help keep the lending process clear, documented and connected to your build.
40+ Lender Network
Compare construction options from available bank and non-bank lenders rather than relying on a single policy.
Document Coordination
Understand what is needed for assessment, valuation, progress payments, variations and final completion.
Policy and Product Knowledge
Review lender rules for land, building contracts, owner-builders, renovation projects and out-of-contract costs.
Ongoing Build Support
Receive assistance beyond approval as invoices, drawdowns and project changes arise during construction.
Construction Loan Frequently Asked Questions
Common questions about deposits, valuations, progress payments, documents, variations and completion.
How does a construction loan work?
Approved construction funds are generally released progressively as eligible building stages are completed and invoiced. During the drawdown period, repayments are commonly calculated on the funds already advanced, subject to lender and product terms.
How much deposit is required?
The required contribution depends on the lender, land value, completed valuation, contract price, loan amount, financial position and whether lenders mortgage insurance applies.
How do lenders value the project?
The valuer generally reviews the land, approved plans, specifications and fixed-price building contract to estimate the completed property value. The lender decides which value and lending calculation it will adopt.
How often are progress payments made?
Payments are usually tied to the completed stages stated in the building contract. Common milestones include base, frame, lock-up, fixing and completion, but schedules vary.
Can the loan include the land purchase?
Some structures finance both land and construction. The land may settle first, with construction drawdowns beginning after the required contracts, plans and approvals are in place.
What documents will the lender need?
Common documents include financial evidence, a signed fixed-price contract, approved plans, specifications, progress schedule, builder registration and insurance, land documents and quotes for excluded work.
What happens if construction goes over budget?
You may need to contribute more funds, change the project scope or request another lender assessment. Additional lending is not guaranteed, so variations should be discussed early.
Can construction finance fund a renovation?
It may suit substantial structural renovations, extensions, major additions and knockdown rebuilds. Smaller cosmetic work may be funded through another loan structure.
What is an owner-builder loan?
It is a specialist facility for applicants managing or completing the build without a standard independent-builder fixed-price contract. Lender availability and requirements are generally more restrictive.
What happens when the build is complete?
After the required completion documents and any final inspection are accepted, the final progress payment may be released. The facility then generally continues as the agreed home or investment loan.
Related Home Loan Services and Calculators
Plan the Finance Before Your Builder Starts
Speak with an Adelaide mortgage broker about your land, plans, building contract, progress payment schedule, deposit and out-of-contract costs. We will help you understand the lender requirements and available construction loan pathways.
General information only. This content does not consider your individual objectives, financial situation or needs. Construction loan products, interest rates, fees, repayment arrangements, progress payment processes, valuation requirements, eligible builders, maximum loan-to-value ratios, accepted property types and documentation requirements vary between lenders and may change. Interest during construction is commonly calculated on funds already drawn, subject to the lender and loan structure. Additional finance for variations or cost overruns is not guaranteed. Lending criteria, terms, conditions, fees and charges apply. Approval is subject to lender assessment, verification of income and project information, acceptable credit conduct, satisfactory valuation and completion requirements.