Land and Construction Loans

Buying land and building on it involves two major transactions. A land and construction loan combines both into a single facility, covering the land purchase at settlement and then converting to a staged construction loan when the builder is ready to commence. This avoids the cost and complexity of arranging separate finance for land and construction. Settled Funding Group structures land and construction loans for owner-occupiers, first home buyers, and investors across Australia through bank and non-bank lenders, and for unique scenarios can introduce you to private finance options.

Who This Is For

• •Buyers purchasing land in a new estate or existing suburb with a plan to build
• •Those who want one application and one loan rather than a separate land loan and construction loan
• •Investors acquiring a site and building a new rental property
• •First home buyers using a house and land package in a greenfield estate
• •Owner-occupiers buying land to build their chosen home design
• •Borrowers building in a greenfield estate where land and construction are bundled by the developer

How Land and Construction Loans Work

The loan is established to cover the full project cost: land price plus construction contract. At land settlement, the land component is funded and the land becomes the security. The construction component activates when the builder is ready to commence, at which point funds are released in stages from slab to practical completion. Lenders generally require construction to start within 12 to 24 months of land settlement. At practical completion, the loan converts to a standard mortgage. Joseph Farhat reviews your land contract, builder agreement, and financial position from the start, then structures the facility to cover both stages without the need for a separate application.

A land and construction facility can fund a project from initial site acquisition through to a completed investment portfolio. See the Wallsend townhouse case study for an example of how a combined land and construction approach funded a build-to-hold project from site purchase through to a completed investment asset.

What Lenders Assess for Land and Construction Loans

• •Land purchase price and location: lenders assess the land value and location separately. New estate land can sometimes attract more conservative valuations than established suburb land.
• •Fixed-price builder contract: a complete fixed-price HIA or MBA contract with a licensed builder is required before construction funds are activated.
• •Combined LVR across land and construction: lenders assess the total loan amount against the on-completion value of the finished dwelling on the land. Both components must fit within the LVR policy.
• •Construction commencement timeline: most lenders require construction to start within 12 to 24 months of land settlement. Delays beyond this window can require renegotiation of the facility.
• •Income and serviceability: the borrower must service the combined debt during the construction period and at completion. First home buyer concessions are factored in where applicable.
• •On-completion value: the projected value of the finished dwelling on the purchased land is the key number the approval is structured around. A strong on-completion valuation relative to the combined land and build cost improves loan options.

The Land and Construction Loan Process: What to Expect

1. 1.Initial assessment: share your land contract, build plan, and income position with Settled Funding Group. Joseph Farhat reviews the combined land price and construction cost against the estimated on-completion value, and identifies lenders whose policy covers both stages in a single facility.
2. 2.Single application covering both the land purchase and the construction contract, prepared and submitted with the full documentation package.
3. 3.Land settlement funded first. The construction contract activates when the builder is ready to commence, typically within the lender's required timeframe.
4. 4.Staged construction drawdowns released from slab to practical completion. At each milestone, the lender or an inspector confirms the completed work before releasing the next tranche.
5. 5.At practical completion, the loan converts to a standard mortgage. Settled Funding Group manages the full process from land purchase through to the final drawdown.

Indicative Finance Options

Land and Construction Loan Broker

Land and construction loans combine two stages, buying the land and funding the build, and lender policy on how those stages connect varies widely. Some lenders fund land and construction on a single facility, others require the land to settle first, and the timing rules, deposit requirements, and valuation methods differ sharply between banks and non-bank lenders. Builder accreditation and fixed-price contract requirements add further variation, and a borrower or block one lender declines is often a comfortable fit for another. A broker who knows which lenders suit a combined land and construction deal and your income position saves you time, avoids wasted applications and unnecessary credit enquiries, and gives you access to lenders most borrowers cannot approach directly. For complex or time-critical settlements, a broker knows where the deal will get done.

Settled Funding Group represents you, the borrower, not the lender. Joseph Farhat reviews your land contract, your build plan, and your income position, then matches your scenario to the right lender from our 90+ panel and negotiates terms on your behalf. We prepare and manage the application so the land and construction stages line up cleanly through to your first progress drawdown, and for unique scenarios we can introduce you to private finance options. As a broker, we are typically paid by the lender on settlement, so in most cases there is no direct cost to you. If your land and construction loan is complex or up against a settlement deadline, talk to us early and we will tell you honestly what is achievable.