How does a construction loan work?

A construction loan releases funds in stages as your home is built, for example at slab, frame, lock-up, fixing and completion, so you only pay interest on the money drawn so far. This suits new builds because it matches payments to construction progress. Your lender or broker can set one up to align with your Hotondo Homes build schedule.

What is a construction loan?

A construction loan is a home loan designed for building, where the bank pays your builder in progress stages rather than all at once. During construction you typically make interest-only repayments on the amount drawn, then it converts to a standard mortgage at completion. It's the usual way to finance a new home build in Australia.

Do you need a deposit for a construction loan?

Yes, construction loans generally require a deposit, though the amount varies by lender and your circumstances. Because building can attract lower stamp duty and you may qualify for first home buyer support, the upfront cost can be lower than buying established. Speak to a lender or broker about your deposit options.

Are construction loan interest rates higher?

Construction loan rates are often similar to standard variable home loan rates, and during the build you usually pay interest only on funds drawn, which can keep repayments lower while construction is underway. Rates and terms vary by lender, so compare options with a broker before you commit.

How do I finance a new home build?

Most people finance a new build with a construction loan that releases money in stages as the home is built, often alongside first home buyer grants or concessions if eligible. Your local Hotondo Homes builder works to your finance schedule, and a lender or broker can structure the loan to suit your build.

Hotondo Homes Home Builder Tools

Our Calculators

Our extensive suite of calculators is the perfect tool to help you gain a better understanding about your financial position and is a great starting point when considering your various finance options.

BORROWING POWER CALCULATOR
What is your current borrowing power?

HOME LOAN OFFSET CALCULATOR
How might you benefit from an offset account?

LOAN REPAYMENT CALCULATOR
Your regular repayments based on your loan amount.

SAVINGS GOAL CALCULATOR
How long will it take you to reach your savings goal?

LOAN COMPARISON CALCULATOR
Compare two different loans to determine which is best for you.

PROPERTY BUYING COST CALCULATOR
Estimate all your potential costs to buy a new home.

STAMP DUTY CALCULATOR
Determine the estimated stamp duty required for your new home.

RENT VS BUY CALCULATOR
Compare how beneficial it is to buy or rent over an extended period.

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