Financing your

construction or renovation

construction or


For many people, the ability to build a new home exactly to their preferences is an ideal scenario. For others, renovating their current home to better suit their lifestyle can make a huge difference.

Choosing the right construction or renovation loan.

Loan Market brokers can help you to finance buying land, building new homes, purchasing off-the-plan and house & land packages.

You have a few options when it comes to finance. When building a new home, a construction loan is worth considering. Depending on the size of the renovation you may be thinking about refinancing your home loan or taking out a personal loan. Your Loan Market broker can talk you through your options and find the right loan for you.

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What is a construction loan?

A construction loan is finance specifically for the construction of property. It is paid in instalments as the work is completed. Borrowers will generally need a deposit and provide detailed plans of the construction work to be completed when applying. The loan is then secured by the property being built.

What is the difference between a home loan and a construction loan?

A home loan generally consists of a single payment upfront at the settlement of a property. A construction loan works differently. It consists of payments at various stages of the construction as it is completed, known as progressive drawdowns, paid directly to your licensed builder.

Often a construction loan will offer interest-only repayments during the build and convert to a principal and interest repayment once the construction is complete. This means that you only make interest repayments on the funds that have been drawn down at any time.

How can I finance a home and land package?

Generally, buying a house and land requires two products. They are processed separately but can be bundled together. The land purchase is similar to a regular mortgage and then the finance for the home is usually a construction loan.

How do construction loan payment instalments work?

Before the property construction begins, the builder will prepare a document that lists the overall cost of the project along with a breakdown of the stages that will form the schedule of payment. The builder then issues an invoice at the completion of each stage. The lender may choose to send someone to the property to check the construction is progressing as stated.

Often the stages will be:

  1. Slab – laying the foundations.
  2. Frame – construction of the frame, roof, windows and some brickwork.
  3. Lockup – installation of outside walls, doors and windows.
  4. Fit out – installation of electricity, plumbing, gutters and plasterboard.
  5. Completion – final touches are made including final electricity, plumbing and cleaning.

What deposit do I need for a construction loan?

The amount you will need as your deposit depends on the lender. Generally, most lenders want a 20% deposit, however, you may be able to pay less, however this usually requires you to pay lenders mortgage insurance (LMI).

What are my options for a renovation loan?

The type of renovation loan that is right for you depends on the size of the project. If you do not have the money to fund the project outright, your Loan Market broker can talk through the following options to find the right one for you.

Your options could include:

  1. Refinancing your home loan to leverage equity in your property.
  2. Applying for a construction loan if it is a large renovation project.
  3. Finding a competitive personal loan.
  4. Cashing in investments, redrawing from your home loan or using savings/offset.

Your next step

starts here.

Make it happen

Let us know what your goals are and we will connect you with a Loan Market broker directly.

Find a broker

Find a broker close to you, or set up a video call at a time that suits you.

You might find this


Budget planner calculator

Understand how much money you have coming in compared to what you spend using this calculator to help you identify where you could save.

Loan repayment calculator

Understand the amount you will need to pay your lender before you apply for a home loan and ensure you can comfortably meet your repayments.

Personal loan repayment calculator

Determine your repayments and the total amount of interest you are likely to pay.

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