Constructions Loans Melbourne - Smarter Finance for Your Next Build
Building your dream home or starting a major renovation? A construction loan gives you access to funds in stages, helping you pay builders and suppliers as the work progresses. At Money Bar, we specialise in construction finance tailored to your project – whether you’re an owner-builder, working with a developer, or renovating in Victoria. From loan strategy to lender negotiation, we guide you from foundation to finish with clarity and care.
What Is a Construction Loan?
A construction loan is a short-term loan designed to fund the cost of building or significantly renovating a home. Unlike a standard mortgage, the funds are released progressively, typically in five stages aligned with your builder’s invoice schedule (slab, frame, lock-up, fit-out, completion). You usually pay interest only on the amount drawn down.
This staged release helps reduce your interest costs during the build. Once construction is complete, the loan typically converts to a standard home loan with principal and interest repayments.
How Do Construction Loans Work?
A common question we get is: how do construction loans work? Put simply, a construction loan is released in stages – not as a lump sum – and is tied to the progress of your build.
Here’s how the construction loan process typically works:
- Apply and Get Pre-Approval: We help you assess your borrowing power and get pre-approved based on your plans and budget.
- Submit Building Documents: You’ll provide a signed building contract, council-approved plans, and a progress payment schedule.
- Loan Assessment & Approval: The lender reviews your documents and confirms the drawdown terms aligned with the construction phases.
- Progress Payments: Begin Funds are released in instalments – for example: slab, frame, lock-up, fit-out, and final handover.
- You Pay Interest Only on Drawn Amounts: You’re only charged interest on what’s been paid out -which helps manage cash flow during the build.
- Loan Converts Post-Completion: Once the build is finished, the loan typically switches to a standard home loan structure.
Who Is Eligible for a Construction Loan?
Construction loans are typically available to:
- Owner-occupiers building a new home
- Investors funding a new build or significant renovation
- Owner-builders (some lenders have stricter criteria here)
- Borrowers with a fixed-price building contract and council-approved plans
Eligibility is based on your income, equity (usually 20%+), credit score, and your builder’s credentials. We’ll guide you through each step to ensure your application ticks the right boxes.
Construction Loan Interest Rates & Fees
Construction loan rates are often slightly higher than standard home loans due to the additional risk and admin involved. However, the difference is usually modest – and we help you compare rates across major banks and niche lenders.
Common fees include:
- Valuation fees: for the lender to assess the project value
- Progress payment admin fees: per stage drawdown
- Construction loan setup fees
- Lenders Mortgage Insurance (LMI): if your deposit is under 20%
Our role is to help you compare the full cost – not just the rate – and structure a loan that fits your financial strategy.
Why Choose Money Bar as Your Construction Loan Broker?
We specialise in helping Australians finance their builds with clarity, confidence, and the right strategy. Here’s how we raise the bar:
We know the ins and outs of construction finance – from suburban builds to dual occupancies. With strong lender relationships and builder-friendly processes, we make the funding side smooth, so you can focus on the build.
Construction Loan FAQs
What deposit is needed for a construction loan?
Most lenders require at least a 20% deposit based on the combined land + construction value. LMI may apply if you’re under that threshold.
Can I get a construction loan for renovation?
Yes, if you’re doing a structural renovation (like adding a level or major extension), a construction loan may apply. For cosmetic work, a personal loan or equity loan may be better suited.
Do construction loans cover landscaping or fencing?
Typically no – unless these works are included in the building contract. We help you clarify inclusions and avoid last-minute funding gaps.
Here to help
Reach out to us effortlessly! Whether you opt for a chat, an email, or a brief form, we’re ready to establish a connection and offer the personalised assistance you require. Select your preferred contact method and initiate the discussion today.
Email: money
Phone: 0476 291 998
Address: 547 Chapel Street, South Yarra, Victoria, 3141