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Construction Loans

Construction loans are designed to help home buyers finance the construction of a new home or the renovation of an existing property. These loans are typically different from traditional home loans, as they provide funds in stages throughout the construction process.

If you’re considering building a new home or renovating an existing property, a construction loan can provide you with the funds you need to get the job done. These loans can cover everything from the purchase of the land to the building materials, labour costs, and other expenses associated with construction.

Construction loans can be complex, however, so it’s important to work with a mortgage broker who has experience in this area. Smyth Loan Co can help you navigate the application process, ensuring that you have all the necessary documentation and that your loan is structured in the most effective way for your individual circumstances.

Overall, if you’re considering a construction loan, it’s important to work with a trusted mortgage broker who can provide guidance and support throughout the process. With the right advice and loan product, you can build the home of your dreams and create a property that’s tailored to your individual needs and preferences.

Construction loans are intended to assist individuals in financing the construction of a new home or the renovation of an existing property. Unlike traditional home loans, constructions are paid down progressively i.e. the bank makes progress payments to your builder as the construction progresses.

Normally, the stages & recommended drawdown schedules are:

1. BASE STAGE 15%,
4. FIXING STAGE 25%, &

As the build progresses your repayments will increase – one thing to note is that the majority of constructions loans are interest only until completion. Banks understand that you are probably paying rent, board, or another mortgage at the time of the build.

While construction loans offer substantial benefits, they can also be intricate. Therefore, collaborating with a seasoned mortgage brokerage like us at Smyth Loan Co is essential. We specialise in construction loans and will happily guide you through the application process, ensuring that all required documentation is in place and that your loan is structured optimally to suit your specific circumstances.

We love constructions loans & seeing your dreams turn into a reality!


Here’s a brief overview of construction loans & some benefits through a broker:

  1. Land Purchase: Construction loans/land loans can be used to finance the purchase of land on which to build a new property.
    This initial phase involves securing the desired land parcel, which serves as the foundation for the construction project.
    The loan may cover the full cost of purchasing the land or a percentage of the total acquisition price, depending on what equity you have available and/or deposit.

  2. Construction Costs: After acquiring the land, the construction loan disburses funds to cover the costs associated with building the new property. This includes expenses such as materials, labor, permits, architectural fees, and contractor fees.
    The loan is typically structured to release funds in stages, known as “draws,” as construction progresses and specific milestones are met.
    Only ‘Fixed Priced Build Contracts’ will be accepted by a lender – no ‘Cost Plus Contracts’ are permitted.
    To submit a construction loan, at the bare minimum we require draft site plan, floor plan, & elevation plan, in addition to a fixed priced building contract, and a detailed list of build specifications (also known as build inclusions). We cannot have a loan assessed or approved based on a quote.

  3. Interest-Only Payments: During the construction phase, borrowers often make interest-only payments on the loan, rather than paying down the principal balance. This helps to manage cash flow during the building process, as payments are based on the amount of funds drawn rather than the full loan amount.

  4. Conversion to Mortgage: Once construction is complete, the construction loan is typically converted into a traditional mortgage or long-term financing arrangement. This transition allows borrowers to repay the remaining balance of the loan over an extended period, at variable or fixed interest rates.

  5. Flexibility and Customisation: Construction loans offer flexibility and customisation to accommodate the unique needs of each project.
    Borrowers can tailor loan terms, repayment schedules, and draw schedules to align with the specific requirements of their construction project and financial situation.
    Normally a lender will provide up to 2 years to construction the home as a maximum limit.

  6. Risk Management: Construction loans involve inherent risks, including cost overruns, construction delays, and unforeseen challenges.
    Lenders mitigate these risks by conducting thorough assessments of the project, including feasibility studies, appraisals, and evaluations of the borrower’s financial stability and construction experience.

  7. Expert Guidance: Given the complexities involved in construction lending, borrowers often seek guidance from experienced lenders, builders, architects, and real estate professionals to navigate the process effectively and ensure successful project completion.
    We’re happy to provide an advice on prospective builds & guide you through the experience.


In summary, construction loans provide essential financing for purchasing land and building new properties. By offering funding in stages, flexibility in loan terms, and expert guidance, these loans empower borrowers to undertake construction projects with confidence and realise their vision of a building a new home.


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