Build Your Dream Home

Important Information

Esteb and Co provides credit assistance services. We are licensed credit representatives (ASIC Credit Rep #574070) who help you compare loan options from our panel of lenders. We do not lend money directly. All loan approvals are made by lenders, subject to their criteria and responsible lending assessments. Our service is free to you - we receive commissions from lenders. Read our Credit Guide

Construction Loan vs Standard Home Loan

Land + Build Package

Purchase land and build a new home in one loan. Most popular option for first home builders.

Deposit: Typically 10-20% of total project cost

Knockdown Rebuild

Demolish existing home and build new one on your land. Can use existing home equity.

Deposit: Use existing equity, or 20% of build cost

Owner Builder

Build yourself or manage subcontractors. Higher risk for lenders, stricter criteria.

Deposit: 20-30% typically required

Major Renovation

Significant extensions or renovations. Progress payments as work completes.

Deposit: Use home equity or 10-20% cash

Lender approves you for the full construction amount based on your income, deposit, and proposed build.

Choose builder, finalize plans, sign fixed-price building contract. Lender reviews and approves contract.

First payment released for land purchase or deposit to builder. Construction begins.

Builder requests payment as each stage completes:

• Base stage (slab/foundations) - 15%
• Frame stage - 20%
• Lock-up stage (roof, windows) - 25%
• Fixing stage (plumbing, electrical) - 20%
• Completion - 15%

Lender sends inspector to verify work before releasing each payment.

Construction complete! Final payment released. Loan converts from interest-only to principal + interest standard home loan.

Current Construction Loan Rates

Construction rates are typically 0.2-0.5% higher than standard home loan rates due to higher risk and complexity.

Additional Costs to Budget For

• Progress inspection fees: $250-$500 per inspection (5-6 inspections)
• Building insurance: $800-$2,000 during construction
• Council fees & permits: $5,000-$15,000
• Connection fees: Water, electricity, gas - $2,000-$5,000
• Landscaping & driveways: Often not included in build - $10,000-$30,000
• Rent during construction: 6-12 months if you don't own land

Deposit Requirements

• 10-20% deposit minimum (of total land + build cost)
• Can include land equity if you already own
• Must be genuine savings (3+ months in your account)
• First Home Guarantee accepts 5% deposit for new builds

Builder Requirements

• Must be licensed and registered builder
• Fixed-price contract required (no cost-plus)
• Home warranty insurance (required by law)
• Plans and permits must be council-approved

Borrower Requirements

• Stable employment (6+ months current job)
• Good credit history (650+ credit score)
• Ability to service interest-only payments during build
• Ability to service full P+I payments after completion