New Construction Home Loans in Australia

Are you finally ready to build your dream home from scratch? Or perhaps you’re eager to expand your existing home to cater for a growing household. Whatever your motives are, a construction home loan might be the ideal solution.

Construction loans are great for first home buyers who don’t just want more control over the home they move into, but more control over their financing situation as well. The flexibility of progress payments allows for self-managed cashflow, minimised interest and more flexible conditions.

Progress payments explained

When building a home, your chosen registered builders will charge you for their services in stages. Typically, these progress payments are structured in the following way:

Preparation (plans, permits, connection fees, insurance and other necessary paperwork)
Base (laying the concrete slab, footings, pad and base brickwork)
Frame (completion and approval of the house frame)
Lock-up (installation of windows and doors, roofing, exterior and insulation)
Fixing (this includes components like kitchen cabinetry, appliances, showers and toilets, as well as all the plumbing and electric work, plastering and painting)
Completion (fences erected, all construction debris removed and finishing touches applied)

While most banks and lenders offer construction home loans, there are lots of prerequisites and conditions that need to be met in order to be eligible.

There are two common ways to go about building a house in Australia – buying the land first and then building a property on it, or buying a house and land package. This affects which construction home loans you’re eligible for. In the points below, we’ll walk you through the process so that you have a better idea of whether a new construction home loan is the right avenue for you.

Home construction loans: Buying then building

Take out a standard home loan to buy a block of land (most lenders will lend up to 90% or even 95% of the land purchase price).
Given that you’re likely to still be renting somewhere at this stage, you can usually opt for interest-only repayments while your house is being built.
Find a suitable builder, decide on a home design, and agree on a fixed price building contract (a document that includes the plans, specifications, guidelines and price of your home construction).
The total cost of your home construction will typically be broken down into 3-6 process payments – one for lying the concrete slab (for example), another for building the walls and roof, and so on.
Your home loan is initially just for the land, and then increases with each progress payment (i.e. the lender is paying the builder for these progress payments, and this is being added to your loan).

Construction home loans: Purchasing a house and land package

As the name suggests, this is where you know the exact lump sum figure for buying the land and building the home, because it’s all purchased together.

If you’re a first home buyer with the intention to live in the home you are building, there’s a good chance that you’ll be eligible for the Australian Government’s First Home Loan Deposit Scheme (New Homes) Guarantee – this scheme allows first home buyers to secure a loan with just a 5% deposit.

Learn more about new construction home loans, with BFG Loans

Our expert brokers can help you navigate the process of finding the right construction home loan for your individual needs and circumstances. We work with a vast array of reputable financial institutions and lenders to secure tailored loan products for our valued clients – be it a construction loan, first homebuyer finance, owner-occupied loan, guarantor home loan or otherwise. Get in touch to arrange a consultation with our friendly experts today.

Hear how BFG is making a real difference to the public

We are so happy to have been able to work with Sam at Benevolence Financial Group on bringing our home ownership dreams to life. As first home buyers we had no idea what we were doing and whether we were even in any kind of position to purchase. Sam explained everything and patiently answered our many questions, talking us through every step of the process.

Jen

Highly recommended. Sam and his team are a highly professional group who helped us with a refinance. They were attentive, proactive, and knowledgeable in their service as they guided us through the transition.

Oliver

Sam from the BFG looked after myself and my Fiance when we got our first home purchase. Sam was very down to earth, professional and really went above and beyond to help us every step of the way. He helped us, offered us support and made sure we get through things very smoothly. he answered all our questions and was always available to chat, was very proactive and always had the answers.

Reta

I can’t recommend enough Sam, he’s caring, savy, organise, responsive and very knowledgeable, Sam really care about you and he will always procure to get the best outcome for you. Thanks so much for your help Sam, I can’t thank you enough.

Patrick

We met with Samuel and right from the start he listened to our goals and got us meeting with the relevant people. He was extremely proactive and found lenders to say yes when our current said no. Have used him many times and would recommend him to any small business owner who is trying to get ahead and set up an income for their future and future family. Look forward to continue to working with him and his team

Andrea

Samuel has been incredibly helpful guiding us through our first home purchase. He’s been incredibly patient, very responsive, and got us a great deal on our mortgage. On top of all that, his business model is geared toward socially responsible and ethically minded businesses/banks – something we really valued. It’s great to know our investment is doing something great for us, but also for others and the world. We would highly recommend this business and specifically Samuel, he’s just an absolute legend!