Construction Loans – Secure Land Too (2026 Guide)
Worried about securing land with your construction loan? Discover how to include land in your loan easily. Learn the steps today and build your dream.
Building your dream home is an exciting journey, but financing the construction process can be overwhelming. You may be wondering, "Can a construction loan include land?" This is a common question for many Australians looking to embark on a home-building project. The good news is, construction loans can indeed cover the cost of land, making it easier for you to manage your finances and turn your dream into reality. In this blog post, we'll explore everything you need to know about construction loans and how they can include land purchases.
Understanding Construction Loans
Construction loans are specialised financial products designed to cover the costs associated with building a new home. Unlike standard home loans, construction loans are typically disbursed in stages, corresponding to different phases of the construction process. This staged approach ensures that funds are available when needed and helps manage the risk for both the borrower and the lender.
One of the key advantages of a construction loan is its ability to include the cost of land. This means you can purchase a plot and finance the construction of your home under one loan package, simplifying the financial management of your project.
Rates, Requirements, and Options
When considering a construction loan, it's important to understand the current market conditions, eligibility criteria, and options available to you. As of 2026, construction loan interest rates in Australia typically range from 6.49% to 12%, depending on the lender and the borrower's financial profile.
Eligibility criteria for a construction loan often include:
- Good credit history
- Stable income and employment
- Deposit or equity, usually at least 5% to 20% of the total land and construction cost
- Builder's contract and plans
At Esteb and Co, with access to over 83 lenders, we offer a wide range of construction loan options to suit different needs and financial situations. Our network allows us to find competitive rates and flexible terms tailored to your specific project.
| Lender | Interest Rate Range | Loan Features |
|---|---|---|
| Lender A | 6.49% - 8.50% | Fixed and variable rates, staged payments |
| Lender B | 7.00% - 9.00% | Interest-only during construction |
| Lender C | 7.50% - 12.00% | Offset account, redraw facilities |
Steps to Secure a Construction Loan Including Land
Securing a construction loan that includes land requires careful planning and preparation. Here’s a step-by-step guide to help you through the process:
- Determine Your Budget: Calculate the total cost of the land and construction. Consider additional costs such as permits, inspections, and contingencies.
- Get Pre-Approval: Approach a mortgage broker, like Esteb and Co, to get pre-approval based on your financial situation and creditworthiness.
- Select a Builder: Choose a reputable builder and obtain a fixed-price building contract and detailed plans.
- Apply for the Loan: Submit your loan application along with the builder's contract, plans, and any required documentation.
- Valuation and Approval: The lender will conduct a valuation of the land and construction plans before final approval.
- Settlement and Staged Payments: Once approved, the loan settles, and funds are disbursed in stages as construction progresses.
Tips and Considerations
Before you dive into a construction loan, consider these expert tips to ensure a smooth process:
- Research Builders Thoroughly: Ensure your builder is licensed, insured, and has a good track record.
- Understand Staged Payments: Familiarise yourself with the stages of payment and ensure your contractor adheres to the agreed timeline.
- Plan for Delays: Construction projects can face unexpected delays. Have a contingency plan or reserve funds to manage potential setbacks.
- Consult a Mortgage Broker: Leverage the expertise of mortgage brokers like Esteb and Co to navigate lender options and secure the best deal.
Frequently Asked Questions
- Can I include both land and construction costs in one loan?
Yes, a construction loan can cover both land and construction costs, streamlining the financing process. - What is a staged payment in a construction loan?
Staged payments are disbursements made at various phases of construction, such as foundation laying, framing, and completion. - Do I need a deposit for a construction loan?
Yes, typically a deposit of 5% to 20% of the total project cost is required, depending on the lender and your circumstances. - How long does it take to get a construction loan approved?
Approval times can vary but generally take between four to six weeks, depending on the lender and complexity of the project. - What happens if construction costs exceed the loan amount?
It's crucial to have a buffer in place. Additional funds may need to be sourced if costs exceed the loan agreement. - Can I refinance a construction loan into a regular home loan?
Yes, once construction is completed, you can refinance into a standard home loan with possibly better terms. - What factors affect my eligibility for a construction loan?
Your credit score, income stability, deposit size, and the builder's credentials all play a role in loan eligibility.
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With direct experience helping Australians secure home loans, car finance, and business funding, Ricky founded Esteb and Co to bring transparency and technology to mortgage broking.