ACL 390611 | MFAA Member | Established 2005
Construction Loans.Drawn Down as You Build.
A construction loan releases money in stages as the work is completed, so you pay interest only on what has actually been drawn. What decides the whole thing is your building contract. Lenders read it more carefully than most people do before signing it, and so do we.
15 minutes, ideally before you sign anything with a builder. Bring the quote or the tender if you have one. No credit check, no paperwork, no obligation, and we will tell you what a lender will want changed in that contract. Lenders pay us a commission on settlement and we disclose it in writing before any work begins.
Intellect Finance – Construction Loan Brokers
Independent since 2005 | ACL 390611What Is a Construction Loan and How Does It Work?
A construction loan is a home loan released in stages as building work is completed, rather than in one amount at settlement. Each stage is paid directly to the builder after the lender verifies the work, and you pay interest only on the balance drawn so far.
The stages follow the progress payment schedule in your building contract. In New South Wales, every residential building contract over $20,000 must have a progress payment schedule, and payments must match the work actually carried out. The lender’s drawdown schedule is built to line up with that document, which is why the contract is assessed as closely as your income is.
A construction loan funds work that does not exist yet: a new build, a knock down rebuild, a second dwelling or a house and land package. Improving a house that already stands is a different decision with different structures behind it, and it is covered on the renovation loans page.
Common Situations
What People Are Usually Building
Six situations cover most construction loan enquiries. The finance is similar in each. What changes is the contract, the approvals and where the risk sits.
Knock down and rebuild
You own the land and the house on it is at the end of its life. Demolition, approvals and the build are funded together, and the lender values the property on what will be standing at the end rather than what is there now.
A granny flat or secondary dwelling
A second self-contained home on a block you already own. In New South Wales the complying development pathway needs a lot of at least 450 square metres, and a lot carrying a secondary dwelling cannot be subdivided, so the added value stays on one title.
Building on land you already bought
The land settled first and the build follows. Some lenders treat this as two facilities and some as one. Which one you are with matters more than most people realise. See land loans.
A house and land package
Two contracts, one project, and a timing sequence that has to work. The land settles, then construction draws begin. Getting the finance approved across both at once is the part that goes wrong when it goes wrong.
A duplex or dual occupancy
Two dwellings on one lot, which the Low Rise Housing Diversity Code allows as complying development where the zoning already permits it. Until the lot is subdivided a valuer prices it as one property rather than two. See investment loans if one side is to be rented.
You are considering owner-building
Far fewer lenders will fund it, the assessment is stricter, and the consumer protections that apply to a licensed builder’s contract work differently. Possible, but go in knowing the finance is the hard part.
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Joseph Sukkar
Principal Broker · ACL 390611
Who You’re Dealing With
Built on 25 Years in Australian Finance
Joseph Sukkar started in finance in 2000 and founded Intellect Finance in Penrith in 2005. Since then the team has arranged more than 6,500 loans for clients across Australia, from first homes to complex commercial and asset finance.
Residential lending sits with Moufid, our Head of Residential Lending, who has managed enough drawdown schedules to know which lenders answer the phone at stage three. On a construction file the useful work happens before the building contract is signed, reading it the way a credit assessor will and saying what a lender will object to while the builder can still change it. Construction policy varies more between lenders than almost anything else in residential lending, and choosing wrong shows up as delay.
100+ Lenders Including
Accreditation with a lender is not an endorsement by it. Which lender suits you is decided by your file, not by who is on this list.
Got a Quote but Not a Loan Yet?
Talk to us before you sign. Fifteen minutes, no credit check.What Actually Decides It
The Building Contract Underwrites a Construction Loan
The drawings get the approvals. The building contract gets the finance. Six things about that contract decide whether a construction loan is approved, what it costs to run, and who carries the risk when the build moves.
The drawdown schedule mirrors the contract
In New South Wales every residential building contract over $20,000 must include a progress payment schedule, and payments must match the work actually carried out. The lender builds its release schedule against that document. A contract with vague or front-loaded stages is a contract a lender will argue with.
You pay interest only on what is drawn
Funds are released stage by stage, so the interest cost climbs as the build progresses rather than starting at the full amount. That is the single biggest cash flow advantage of a construction facility, and it is why the build timetable is a financial document as much as a construction one.
It is valued on what will be standing at the end
The valuation is prepared on completion, from your plans and your contract. If the finished value comes in under what the project costs to build, the gap is yours to fund. That is the most common reason a construction application is restructured after the first valuation lands.
The contract itself has legal minimums
In New South Wales residential building work over $5,000 including GST must be under a written contract, the maximum deposit that can be asked of you is 10 per cent, and for work valued over $20,000 you have a cooling-off period of five clear business days after being given a copy of the contract. Most people sign without knowing any of that.
No insurance certificate means no money
Where work must be covered under the Home Building Compensation Scheme, which in New South Wales applies to contracts over $20,000, it is illegal for the contractor to ask for a deposit or any payment before that cover is taken out. Lenders check for the certificate. A missing one stops the first drawdown, not the last.
Variations are funded by you
The facility is sized on the contract price. Change the kitchen, hit rock, upgrade the windows, and the difference comes from your own funds unless a contingency was built into the loan at the start. Ask for one. It costs nothing while it is undrawn.
Checked 31 August 2026. The written contract threshold, the 10 per cent maximum deposit, the five clear business day cooling-off period, the progress payment schedule requirement and the Home Building Compensation Scheme position are published by the NSW Government. Best Interests Duty is from ASIC Regulatory Guide 273 and lenders mortgage insurance from ASIC Moneysmart. Secondary dwelling lot size and subdivision rules and the dual occupancy pathway are published by NSW Planning. Every other state and territory has its own home building and planning laws and thresholds. We are not solicitors. Have a building contract reviewed by your own solicitor before you sign it. Everything else on this page is described in the important information at the foot of the page.
The hour spent on the contract before it is signed is worth more than any hour spent on it later. We will read it the way a lender will and tell you what will hold up the finance, and we would rather do that now than at stage three. Send us the contract.
The Honest Comparison
Fixed Price Contract or Cost Plus?
This is the decision that makes a build fundable or not, and most people make it with their builder before they ever speak to a lender. Both are lawful in New South Wales. Only one of them is straightforward to finance.
The builder charges cost plus a margin
- Suits a job where the scope genuinely cannot be pinned down before work starts
- You see what each trade actually cost rather than the allowance a builder put against it
- No capped contract price, so there is no firm number for a valuer or a credit assessor to work to
- Far fewer lenders will fund it, and the ones that do assess it harder
- The budget risk is yours. If the job runs over there is no contract sum to fall back on
A fixed price contract with a licensed builder
- A capped price the lender can value against and lend to
- The progress payment schedule maps onto the drawdown schedule stage by stage
- Accepted across the broad lender panel rather than by a handful of them
- Cost overruns sit with the builder unless you sign a variation
- Less room to move once work begins. Every change is a priced variation
If your builder has offered cost plus, go back before you sign. That is an awkward conversation and it delays the loan, ours included, so it is not advice we give lightly. But a cost plus contract narrows your lender choice to a handful and hands you the budget risk a fixed price contract leaves with the builder. New South Wales permits both, so nobody else in the process is obliged to warn you. The exception is real. Where the scope honestly cannot be fixed, a heritage job or a difficult site, cost plus is the right instrument and the answer is to go to the lenders that will read it rather than to pretend the price is firm. The test before you sign is one question: what happens to the number on page one if the build runs three months long. If the contract has no answer, neither will the lender.
Find Out Which Contract Your Lender Will Accept
Tell us how your builder wants to price the job. We will tell you which lenders can work with it and what they will want changed first. Fifteen minutes. No credit check.The Difference
A Construction Finance Broker Reads the Building Contract Before the Lender Does
Not at stage four. At the contract, where a clause nobody read turns into a drawdown a lender will not release. That is the part we look at first.
We Read the Contract Like a Lender
Stage definitions, the progress payment schedule, the deposit, the insurance certificate and the approvals. We tell you what a credit assessor will object to while you can still ask the builder to change it, rather than after you have signed and paid a deposit.
Legally On Your Side
A loan to build the home you will live in is regulated consumer credit, so Best Interests Duty applies. We must act in your best interests and give priority to your interests where they conflict with ours. Those obligations have applied to mortgage brokers since 1 January 2021.
No Fee. Not Even Clawback.
We do not charge you for the comparison, the structuring or the application, on any loan type. If you discharge the loan early we wear the clawback ourselves rather than invoicing you for it, which plenty of brokers do. Lenders pay a commission on settlement, disclosed to you in writing before any work begins.
100+ Lenders That Differ Sharply Here
Construction policy varies more between lenders than almost anything else in residential lending. Stage counts, how quickly a progress valuation is ordered, owner-builder appetite, and whether land and build sit in one facility or two. Choosing wrong shows up as delay, and delay in a build is expensive.
The Process
How a Construction Loan Comes Together
Four steps, and the first one should happen before you sign a building contract rather than after.
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15 minutes
Before you sign anything
Your income and equity, the site, the scope and roughly what the build will cost. No documents and no credit check. You finish the call knowing your realistic range, whether the project fits it, and what a lender will want to see in the contract you are about to sign.
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You gather
The build documents
This is the set that decides the application. We confirm exactly which parts your chosen lender wants before you chase any of them.
- Signed fixed price building contract
- Progress payment schedule
- Council or certifier approval
- Stamped plans and specifications
- Builder’s licence and insurance certificate
- Your income and identification documents
- Evidence of your contribution to the project
- Contract of sale, for a house and land package
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We handle
Valuation on completion then approval
The valuer works from your plans and contract to establish what the finished property will be worth. We select the lender whose construction policy suits the project, not just the one with the sharpest headline, and we manage the conditions through to unconditional approval.
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Through the build
Drawdowns stage by stage
Each stage is claimed by the builder, inspected or verified, and paid from the facility. We stay in it for the whole build rather than disappearing at settlement, because the drawdowns are where the delays happen and someone needs to be chasing them.
Track Record
Independent Since 2005
Joe Sukkar started in finance in 2000 and founded the practice five years later. Residential lending sits with Moufid, who has managed enough drawdown schedules to know which lenders answer the phone at stage three.
Related Options
Other Ways to Fund a Build
A construction facility is one route. These are the others people land on.
Renovation loans
Improving a house that already stands, where the real decision is which structure funds the work.
Land loans
Securing the block first, with the build to follow when you are ready.
First home buyer loans
Building your first home, and how the 5 per cent deposit scheme treats construction.
Investment loans
A build you will rent out rather than live in, where serviceability and the end valuation are read differently.
Refinance home loan
Where the build is finished and the facility should convert to a standard loan.
Every home loan we arrange
Back up to the full residential range if none of these is quite it.
Send Us the Contract Before You Sign It.
We will read it the way a credit assessor will. It costs you nothing.Questions Answered
Construction Loan FAQs
The questions people ask us most often before they sign a building contract.
What is a construction loan?
A construction loan is a home loan released in stages as building work is completed, rather than in one amount at settlement. Each stage is paid to the builder once the lender has verified the work, and you pay interest only on the balance drawn so far. The same structure funds a knock down rebuild, a house and land package or a new build on land you already own.
How do progress payments work on a construction loan?
The lender releases funds against the progress payment schedule in your building contract. In New South Wales every residential building contract over $20,000 must include one, and payments must match the work actually carried out. The builder claims a stage, the lender verifies it, and the funds are released directly to the builder.
Do I pay interest on the whole loan during the build?
No. Interest is charged on the balance drawn so far, so it rises as each stage is released rather than starting at the full approved amount. Most lenders also allow interest-only repayments during construction, then convert the facility to a standard home loan once the build is complete. Terms differ between lenders.
Can I use a construction loan to renovate?
Yes, for structural work. For cosmetic renovations such as kitchens, bathrooms or flooring, releasing equity is usually simpler and cheaper in effort, because a construction facility brings stage inspections and progress valuations. The dividing line is roughly whether a lender would want a licensed builder’s fixed price contract. Our renovation loans page walks through which structure suits which job.
What does the lender need from my builder?
Generally a signed fixed price contract with a progress payment schedule, the builder’s licence, evidence of the required insurance, council or certifier approval, and stamped plans and specifications. Requirements differ between lenders, which is why it is worth knowing which lender you are going to before the contract is signed.
What happens if the build costs more than the contract price?
The facility is sized on the contract price, so variations and cost overruns generally come from your own funds unless a contingency was built into the loan at the start. Asking for a contingency at application costs nothing while it stays undrawn, and it is much harder to arrange once the build is underway.
Do I need home building compensation cover in New South Wales?
Where the work is required to be covered under the Home Building Compensation Scheme, which in New South Wales applies to contracts over $20,000, the contractor cannot lawfully ask for a deposit or any payment until the cover has been taken out. Lenders check for the certificate before releasing funds, so a missing one stops the first drawdown.
Does Best Interests Duty apply, and what does Intellect Finance charge?
Yes it applies. A loan to build a home you will live in is regulated consumer credit, so brokers must act in your best interests and give priority to your interests where they conflict with ours. We charge you nothing on any loan type, and no clawback fee if you discharge early. Lenders pay a commission on settlement.
Visit Us
Penrith Based.Clients Australia-Wide.
Penrith is our head office and the one you can walk into without an appointment. We also meet clients at Parramatta and in the Sydney CBD by arrangement. Most of the process runs by phone, email and video, so we settle construction loans in every state.
Parramatta
Suite 23, Level 1, 181 Church St, Parramatta NSW 2150
Mortgage broker Parramatta →Ready When You Are
Talk to Us Before You Sign the Contract.
Fifteen minutes with a residential specialist, ideally before you commit to a builder. We’ll tell you your realistic range, what a lender will want changed in the building contract, and which lenders handle drawdowns without holding your build up. If the contract you have been handed will not get through a lender as it stands, we’ll tell you that before you sign it. No credit check, no paperwork, no obligation. Penrith based, clients Australia-wide. Intellect Finance Pty Ltd, ACL 390611.
A home loan for a property you will live in is regulated consumer credit, so Intellect Finance is legally required to act in your best interests under the Best Interests Duty in the National Consumer Credit Protection Act. Building contract requirements described on this page are New South Wales rules and differ in other states. Have your contract reviewed by your own solicitor. Nothing on this page is credit assistance, legal advice or an offer of credit, and no outcome is guaranteed.
Intellect Finance Pty Ltd | Australian Credit Licence 390611 | MFAA Member | AFCA Member
Important information General information only. Not credit assistance, legal advice or an offer of credit. We charge you no fee. Every caveat and source on this page is collected here. Tap to read.
General information only. The content on this page is general in nature and does not take into account your objectives, financial situation or needs. It is not credit assistance, financial advice, legal advice or tax advice, and it is not an offer of credit. You should consider whether it is appropriate for you and seek your own advice before acting on it.
Building contracts are a legal matter. The home building requirements described on this page apply in New South Wales and are published by the NSW Government. Every state and territory has its own home building legislation, thresholds and consumer protections. We are not solicitors, we do not provide legal advice, and we do not review building contracts for legal purposes. Have any building contract reviewed by your own solicitor before you sign it.
Construction risk. Build costs, timeframes and completion values can move. Variations, site conditions and cost increases beyond the contract price are generally your responsibility unless a contingency has been arranged within the facility. An on-completion valuation is an opinion prepared by an independent valuer and may differ from what a project costs to build.
Nothing here is a guarantee of approval. Loan approval, borrowing capacity, interest rates, loan to value ratios, valuations, stage definitions, drawdown processes, whether interest-only repayments are available during construction, and eligibility are determined by individual lenders and by independent valuers, not by us. They differ between lenders and change over time. Timeframes vary with the lender, the valuer, the builder and the certifier, and are not guaranteed. Any figure or timeframe on this page is indicative and is not a quote, an offer, or a prediction of your outcome.
Best Interests Duty. A home loan for a property you will live in is regulated consumer credit under the National Consumer Credit Protection Act 2009. When providing credit assistance in relation to these products, Intellect Finance is required to act in your best interests and, where there is a conflict of interest, to give priority to your interests. These obligations have applied to mortgage brokers since 1 January 2021.
How we are paid. Intellect Finance does not charge borrowers a fee for arranging finance, and does not charge a clawback fee where a loan is discharged early. Lenders pay us a commission on settlement. The basis of that commission is disclosed to you in writing in our Credit Guide before any credit assistance is provided.
Third-party information. Where this page refers to regulatory settings, consumer guidance or lender policy, that information is sourced from the relevant authority and was correct to the best of our knowledge at the date shown on this page. Those rules change, sometimes without notice. Always confirm the current position with the issuing authority or with us before relying on it.
Found something wrong? If you believe anything on this page is inaccurate or out of date, tell us at joe@intellectfinance.com.au and we will review and correct it.
Intellect Finance Pty Ltd | Australian Credit Licence 390611 | MFAA Member | AFCA Member