Construction Loans

Available for applicants wishing to purchase land to build less than four dwellings.

As a rule of thumb, most lenders will allow you to borrow up to 80% (without Lenders Mortgage Insurance) of hard costs for residential constructions of four or less dwellings. Hard costs include acquisition and development (such as land, statutory contributions, construction and professional fees).

These lending ratios apply to transactions where there is a third party builder involved.  Only a small number of lenders will accept owner/builder applications at reduced lending ratios.

In both scenarios the lending institution requires the owner's contribution to be made upfront. This contribution can take the form of additional equity (i.e. security), cash collateral and commencement of construction.

During the construction period funds are paid progressively and are subject to the lender's valuer and/or quantity surveyor confirming that works have taken place.

During construction, interest can be serviced or capitalised.  Upon completion most lenders will allow you to switch to a standard product of choice.