Construction Home Loans in Perth

What is a construction home loan?

A construction home loan is designed for building a new home rather than buying an established one. Because the property is built over several months, the lender doesn't hand over the full loan at once. Funds are drawn down in stages that line up with your builder's fixed-price contract, and you're generally only charged interest on the amount released so far. Once your home is finished, the loan usually converts to a standard principal and interest home loan.

How progress payments work

Most residential builds are funded across a set of standard stages. As each stage is completed, your builder invoices, the lender checks the work and then releases that portion of the loan. A typical build looks like this:

The usual construction stages

• Deposit, the initial payment to get your build underway.
• Slab or base, once the foundation and concrete slab are laid.
• Frame, when the frame is up and approved.
• Lockup, once external walls, windows and doors are in and the home can be locked.
• Fit-out or fixing, covering internal fixtures, cabinetry, plaster and the like.
• Completion, the final payment at practical completion, when your home is ready to move into.

Interest-only while you build

During construction you generally make interest-only repayments, calculated only on the funds drawn down so far, not the full loan. That keeps repayments lower while the home is being built, which helps if you're also paying rent in the meantime. Once the build is complete, the loan typically reverts to principal and interest so you start paying it down.

Land and construction, or house-and-land

Whether you've already bought a block, are buying land and building separately, or are going with a house-and-land package, a construction loan can be structured around your situation. If you're purchasing the land too, we help you line up the land settlement and the construction funding so the two work together rather than tripping over each other.

What lenders look for

• A fixed-price building contract with a licensed, registered builder.
• Council-approved plans and specifications for the build.
• A valuation done on an as-if-complete basis, so the lender values the finished home.
• Your deposit or the equity in your land, plus the borrowing capacity to service the full loan once it's complete.
• Adequate builder's insurance and the right approvals in place before funds are released.

Costs to plan for beyond the build price

The build contract isn't always the whole story. Site costs, connections, landscaping, driveways, fencing and window coverings can sit outside a fixed-price contract, so it's worth budgeting a contingency. We also factor in that you may be paying rent as well as loan interest during the build, and we make sure the numbers still stack up comfortably before you commit.

First home buyers building a new home

Building can be a great path for first home buyers, and building or buying a brand-new home is exactly what the WA First Home Owner Grant is designed for. We check every grant, scheme and stamp duty concession you may be entitled to and factor them into your plan from the start.

How Mesh Finance helps with your build

Construction lending has more moving parts than a standard purchase, and that's where a broker earns their keep. We compare construction loans across our lender panel, handle the paperwork and progress-payment requests, and coordinate with you and your builder so each drawdown happens on time. You get one clear point of contact from your first conversation right through to the final payment and beyond.

Frequently asked questions