What is a construction loan? A construction loan is a type of home loan designed for people who are building a new home rather than buying an existing property. Unlike a standard home loan, where the full loan amount is paid upfront in a lump sum, a construction loan is paid out in instalments as your build progresses. These instalments are known as progress payments and are made at key stages during construction. Typically, our progress payments will follow the schedule below, with payments made at each of these key stages: 1. Deposit payable after contract signing and on receipt of Home Owners Warranty (HOW) Insurance 2. Completion of concrete slab Your Guide to a Construction Loan WHAT IT IS, HOW IT WORKS AND WHO CAN HELP Financing the construction of a new home is different from financing the purchase of an existing one. While many people assume a standard home loan is the way to go, there is another option designed specifically for those building from the ground up. It’s called a construction loan, and it’s structured differently to a typical loan. This guide explains what a construction loan is, the key benefits, and how our finance partner, Loan Market Elevate, can help make the process easier.
3. Erection of frame and roof trusses 4. Completion of brickwork/Hebel 5. Commencement of internal linings 6. Practical completion (building works completed except for minor items)
How do construction loans differ from standard home loans?
CONSTRUCTION LOAN
STANDARD HOME LOAN
Funds are released at key stages during construction, known as progress payments You only pay interest on the payments made so far, not the total loan amount Your lender will need copies of your DA or CDC approval, current architectural plans, signed Building Contract, plus additional supporting documents May include inspections and valuations at some stages of the build
Full loan amount is paid upfront at settlement
You start paying interest on the full loan amount from day one
Less documentation is required
Usually only one valuation before loan approval
How we make the finance process easier
Why finance with Loan Market Elevate? → Only pay a $10K deposit – You will only need to pay $10,000 when you sign your Building Contract instead of the full 5%, saving you thousands in upfront costs. The balance of your 5% deposit is not due until construction is ready to start. → No chasing updates – Building a home is enough to manage. Loan Market Elevate liaises directly with your lender and our team on your behalf, so you don’t have to act as the middle person. → Access to 60+ lenders – As part of one of Australia’s largest broker networks, Loan Market Elevate can help you find a lender that offers not just a competitive rate but great service too. What are the benefits of a construction loan? If you need a loan to build your new home, a construction loan is a smart choice. It offers several key benefits that can help you manage costs and cash flow throughout your build. These include: S Lower repayments during your build – Funds are released in stages, so you only borrow what you need when you need it, reducing the interest you pay along the way. S Interest-only payments – Most construction loans offer interest-only repayments during the build period, easing financial pressure while your home is under construction. S Better cash flow – By deferring principal repayments during construction, you can keep more money in your back pocket, which is helpful if you are renting while building.
Construction loans are structured differently to standard home loans and can be more complex to manage, especially if it’s your first time building. That’s why it’s important to work with a finance expert who understands the construction journey from start to finish. Since 2015, we have partnered with Loan Market Elevate, specialists in construction finance. They understand our build journey, finance requirements, and timelines, and have helped hundreds of our customers successfully navigate the finance side of their build. Based at our Norwest Head Office, Loan Market Elevate works directly with your lender and our operations and construction teams to ensure the right information is provided at each key stage. That means you will not need to chase emails, forward documents, or act as the middle person. They keep your finance moving, so you can focus on building your new home.
Explore how much you can borrow with our online Borrowing Power Calculator. Scan the QR code to learn more.
Speak with Loan Market Elevate today! homefinance.support@loanmarket.com.au 02 8850 9040
Call 13 63 93 | Clarendon.com.au
Clarendon Homes (NSW) Pty Limited. (ABN 18 003 892 706) |
Ground Floor, 21 Solent Circuit, Norwest NSW 2153
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Builder Licence 2298C
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08/2025
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