Construction loans
Finance that follows the build
Bring the land, contract, contribution, progress payments and contingencies into one lending plan before construction begins.
Construction lending is generally released in stages rather than as one payment. The lender may need an accepted fixed-price building contract, plans, specifications, permits, valuations and evidence of funds before approving or releasing money.
Every lender and project can differ. Loans West helps map the finance steps and communicate with the parties involved, while your builder, lawyer and other professionals remain responsible for the building contract and construction work.
Budget for the whole finished project
Land and the base building price are only part of the picture. Site works, variations, provisional sums, finishes, external works, fees and holding costs may affect the funds required. A contingency should be based on your project, not a generic percentage presented as certain.
We can help reconcile the lending figures with the documents supplied and identify amounts the lender expects you to contribute before or during progress draws.
- Land price or current land debt
- Building contract, specifications and known variations
- Site works, allowances and items outside the contract
- Available funds, grants where eligible and contingency
Match approval conditions to the project documents
A lender can assess the borrower's capacity and the proposed security. It may value the project on an as-if-complete basis and require specified documents before formal approval or the first draw.
Changing the design, contract price or builder after approval may require reassessment. Tell the broker before agreeing to material changes.
Understand progress payments before the first claim
The building contract usually sets payment stages. The lender may require invoices, inspections, borrower contributions or other evidence before each draw and may pay the builder directly. Its lending stages may not perfectly mirror informal expectations between the owner and builder.
WA building-contract rules and protections are separate from lender policy. Read the contract, use the official Building and Energy guidance and seek legal advice where needed.
Track changes, timeframes and cash flow
Interest is commonly charged on amounts drawn, while land debt or other facilities may also require payments. Delays and variations can affect both cash flow and approval conditions.
Keep signed variations, invoices and lender correspondence together. Notify Loans West promptly if cost, scope, builder or timing changes.
Prepare for completion and the ongoing loan
The final draw may require completion evidence, insurance, a final valuation or lender inspection. Once construction lending is complete, confirm the ongoing rate, repayment type, repayment amount and any linked offset arrangements.
Frequently asked questions
Questions, answered clearly
General answers are a starting point. Your lending options depend on your circumstances.
How does a construction loan work?
Instead of advancing the full building amount at once, a lender generally releases approved funds as work reaches documented stages. Conditions, inspections, borrower contributions and payment timing vary by lender and project.
Do I need a building contract before loan approval?
A lender commonly needs a signed contract, plans and specifications to complete its security and funding assessment, although an earlier indicative assessment may be possible. Do not treat an indication as formal approval.
What happens if the build price changes?
Variations or cost increases may need to be funded from your own money or reassessed by the lender. They can affect the valuation, loan-to-value ratio and serviceability. Seek advice before signing changes you cannot fund under the existing approval.
Can I use the First Home Owner Grant for construction?
Eligible first home buyers building a new home may be able to access current WA support, but property and applicant rules apply and change over time. Check RevenueWA's current criteria and application process. Scheme eligibility does not guarantee construction-loan approval.
Ready to take the next step?
Talk through your goals with Luke and leave with a clearer idea of what comes next.