Find A Better Rate
Free RP Data Reports
Open menu

Construction loans · Victoria

Construction finance planned around every stage of your build

Chris Berry helps Victorian borrowers compare construction-loan options from more than 40 lenders, prepare the required documents and understand how funds may be released as their project progresses.

Discuss your construction loan Estimate borrowing capacity
New residential home under construction in Victoria
Construction-loan guidance across Victoria

The short answer

What does a construction loan mortgage broker help with?

A construction loan mortgage broker compares lenders that may suit your project, budget, deposit, builder and property. They help organise the application, costed plans, building contract, permits and valuation information, then explain the lender’s progress-payment process and conditions.

Plan before works begin

A construction loan is a process, not one settlement

Unlike a standard purchase loan, construction finance commonly involves an initial approval followed by staged drawdowns. The budget, contract and lender requirements need to remain aligned throughout the build.

  • Model the land, build, site costs and a practical contingency before applying
  • Compare lender policy for the builder, contract, property and proposed loan-to-value ratio
  • Understand interest during construction and the change to regular repayments after completion
  • Prepare documents early so progress claims are less likely to stall

As-if-complete valuation

The lender may value the land and proposed completed home using plans, specifications, contract price, comparable sales and site information.

Progress drawdowns

Approved funds are usually released against completed stages and acceptable invoices, inspections or valuation evidence.

Interest during the build

Interest is generally charged on funds already drawn rather than the entire approved construction amount, subject to product terms.

Cost and timing buffers

Variations, delays, site costs and items outside the contract can create a shortfall. Available cash and contingency should be identified before work begins.

Real client story

Financing four units on one title

A self-employed borrower secured a $1.6 million ANZ construction loan after encountering lenders unable to accommodate four dwellings on one title. The loan settled in November 2025.

Read the four-unit construction story →

Fixed-price building contracts and construction finance

A fixed-price building contract sets a price for the agreed work. It helps establish the project budget, but you still need to understand allowances, exclusions and any terms permitting price changes. A fixed building price is separate from whether your loan has a fixed or variable interest rate.

What is included—and what could change?

Check the scope, plans and specifications against the quoted price. Identify items paid outside the contract and ask your builder to explain every allowance before committing.

  • Prime cost items: allowances for items whose selection or price is not final, such as fittings.
  • Provisional sums: estimated costs for work that cannot yet be priced accurately, such as excavation with uncertain site conditions.
  • Variations: changes to the agreed work can affect both cost and timing; obtain advice about the contract’s process before agreeing.

Questions to resolve with your broker and builder

  • Does the lender accept this builder, contract and progress-payment schedule?
  • Do the plans, specifications and valuation reflect the same scope of work?
  • Which site works, connections, landscaping or finishing costs need separate funding?
  • How much cash remains for variations, delays and any valuation shortfall?
  • When must your own contribution be paid, and what evidence is needed before a drawdown?

Do not assume an approved construction loan will automatically increase if the contract price rises. Tell your broker about proposed changes before relying on extra finance. The lender may require reassessment, updated documents or a cash contribution.

Have an appropriately qualified legal adviser review your obligations and any finance conditions before signing. A lender’s acceptance of a contract does not replace legal or building advice.

Understand construction progress payments · Low-doc construction evidence · Review your construction finance plan

Contract guidance checked 19 October 2026: Victorian Government agreements and contracts guide. Your contract and lender conditions determine the requirements for your project.

Compare the pathway

Construction loan or ordinary home loan?

The right facility depends on whether the security is complete and ready to occupy or whether funds must be released as building work is completed.

Decision point
Construction loan
Standard home loan
Funding
Approved construction funds are released in stages.
Loan funds are generally advanced at settlement.
Valuation
May consider land plus the proposed as-if-complete home.
Usually values an existing completed property.
Interest
Generally applies to the amount drawn to date.
Applies to the funded loan balance after settlement.
Documents
Plans, specifications, fixed-price contract and permits may be required.
The sale contract and property information are usually central.

How it works

From costed plans to the final drawdown.

  1. 01

    Map land value, contract price, exclusions, available cash, deposit, contingency and expected timeline.

  2. 02

    Compare suitable lender policy and obtain approval using the contract, plans, permits and valuation evidence.

  3. 03

    Meet conditions, manage stage claims and prepare for the loan to convert after practical completion.

Common questions

Clear construction-loan answers for Victorians

Can a fixed-price building contract increase in price?

The agreed price covers the specified work, but allowances, exclusions and permitted variations can change your total cost. Review the contract with an appropriate legal adviser and confirm how any proposed changes affect approved finance before relying on extra borrowing.

Does a fixed-price building contract mean a fixed-rate construction loan?

No. The building contract governs the agreed construction work and price. Fixed or variable interest describes the loan pricing. Confirm the lender’s available products and drawdown conditions separately.

How do construction loans work in Victoria?

The lender approves a total facility based on the borrower and project, then commonly releases construction funds in stages after required evidence is supplied. The precise stages, inspections and documents vary by lender and contract.

How much deposit do I need for a construction loan?

It depends on the land value, total project cost, completed valuation, available cash, builder and lender policy. Higher-LVR applications may involve Lenders Mortgage Insurance and tighter requirements.

Do I make full repayments while building?

Many construction products require interest payments on the amount drawn during construction, then convert to principal-and-interest repayments after completion. Product terms and any interest-capitalisation arrangements differ.

What documents will a construction lender request?

Common requirements include a signed building contract, plans, specifications, permits, builder details, insurance evidence, costings and normal income and liability documents. Additional items depend on the project.

Can a broker guarantee the build cost or completion date?

No. A broker can help with credit and loan administration but does not supervise construction or provide building, engineering or legal advice. Independent inspections and professional advice may be appropriate.

House and land package loansConstruction progress paymentsKnockdown rebuild loansRenovation construction loansOwner-builder construction loansLow-doc construction loans

Reviewed 14 September 2026 by Chris Berry. General information only and not financial, legal, building, engineering or tax advice. Lending criteria, valuations, interest treatment, contracts, progress payments and acceptable builders vary. Approval, cost and completion dates are not guaranteed.

Official information: Consumer Affairs Victoria building contracts · Consumer Affairs Victoria progress payments · Consumer Affairs Victoria plans and permits

Ready when you are

Let’s find your better rate.

Book a free 30-minute appointment with a mortgage broker to clarify your next step.

Book an appointment