Construction Loans

A construction loan is a specialist facility that funds the building of a property. Instead of releasing the full loan amount upfront, the lender releases funds in staged progress payments as the build reaches set milestones: typically slab, frame, lockup, fit-out, and practical completion. Interest is charged only on the funds drawn, not the full approved amount. At completion the loan either converts to a standard mortgage or is repaid through sale or refinance.

Yes, though owner-builder construction loans have tighter criteria than loans for licensed builders. Lenders assess the owner-builder's experience, the project complexity, and often require a higher deposit. Not all lenders on SFG's panel offer owner-builder products, but several do. Joseph Farhat can identify the right lender based on your licence type, project size, and state of build.

Typically: a signed fixed-price building contract with a licensed builder, council-approved plans and building permits, evidence of land ownership or a contract of sale for the land, income documentation (tax returns, payslips, or BAS for self-employed), and identification documents. Some lenders require a quantity surveyor's report for larger builds. SFG provides a document checklist tailored to your lender once we identify the right fit.

Progress payments are released at each build stage. The builder invoices the lender once a milestone is complete. For most lenders, an independent inspection is required before each drawdown is approved. The typical schedule is five payments: slab/base, frame, lockup, fit-out, and practical completion. SFG manages the drawdown coordination with the lender throughout the build.

Yes. SFG arranges construction finance for Pty Ltd companies, family trusts with a corporate trustee, and SMSFs. The structure affects which lenders are available and what additional documentation is required. Company and trust construction loans are treated as business lending by most non-bank lenders, which opens access to lenders outside the standard residential product range.

Most residential construction lenders will fund up to 80% LVR on a completed value basis. Some non-bank lenders will go higher, subject to lenders mortgage insurance or higher rates. The LVR is typically calculated on the end value of the completed property, not just the land value, which means borrowers with strong projects can access more funding relative to their equity.

Approval timelines vary by lender type. Bank construction loans typically take 2 to 4 weeks for a straightforward application. Non-bank lenders can move faster, often 5 to 10 business days. For unique scenarios, private finance can approve in days for the right deal, and we can make an introduction. The biggest delays are usually documentation-related: incomplete building contracts, missing permits, or income documentation that needs clarification. SFG prepares your submission to minimise those delays.

A standard home loan releases the full amount at settlement to purchase an existing property. A construction loan releases funds progressively as the build is completed, with interest charged only on what has been drawn. Construction loans require a building contract and council-approved plans that a standard mortgage does not. They also have a finite build period, typically 12 to 24 months, after which the loan converts or is repaid.