Simplifi Lending are experts in construction loans and with access to over 40 lenders, we can find the ideal mortgage for your situation.

Whether you’re buying a newly built property, purchasing off the plan or building your forever home, we simplify the process of finding home construction loans.

Give yourself the best chance of getting approved with a great interest rate- we will research the right home construction loan for you from our extensive panel of leading lenders.

As your mortgage broker, we will co-ordinate each of the progress payments for you. No need to worry about your builder delaying your build- we will make sure they are paid promptly once you authorise the progress payment.

A significant number of our lenders offer interest only during the construction period, which helps to keep your costs down until your home is ready for you to move into.

Okay, home construction loans work differently to normal mortgages, so what documentation do you need?

You’ll need the same identification, income, debt and savings documentation that you would submit for a conventional mortgage application.

But, if your home hasn’t been built yet, the lender will want to verify the value of the completed house. They do this by assessing your construction contract and associated documents.

Your builder will generally take care of this documentation on your behalf. They will provide the following documents that you can use as part of your mortgage application:

Building Plans

This document shows what your house will look like. It also contains drawings of the property, dimensions of the house, and information on where the house will be situated on the block.

Building Specifications

This document details which fixtures, fittings and improvements are included in the property. It will include things like:

  • Tapware, shower and bath selections
  • Cabinetry and benchtops
  • Appliances included in the construction
  • Flooring choices (e.g. tiles, carpet or timber floors)
  • Windows, security screens and doors

Building specifications can be a lengthy document, but it’s a huge part of your application! Any changes or additions you have made in your discussions with the builder should be included in this document.

Building Contract

This document details the specifics of the contract. That includes the cost of the build, how the stages are to be drawn and at what percentages. It will also define when each stage is considered complete and payment is due.

This is a crucial document, so ensure you have it reviewed by our mortgage broker before signing.

Building Contract Stages

The main feature of home construction loans is that payments are released to your builder in stages. We call these stages “progress claims.”

With each progress claim, your builder will invoice you for partial payment of the contract amount. Progress claims are made as each stage of construction is completed.

In a standard home building contract, these stages are:

  1. Deposit Stage
  2. Base/Slab Stage
  3. Frame Stage
  4. External Linings/Enclosing Stage
  5. Fixing Stage
  6. Practical Completion Stage

Your deposit is generally paid to the builder in the early stages of construction (e.g. Deposit/Base/Frame stages). Your approved land and construction loan is then used to fund the remainder of the payments.

The builder has an obligation to assess that each progress payment is proportionate to the value of the work completed during that stage. If not, these stages can be varied (with your agreement) within reason.

Changes to the percentages, or additional construction stages, are common for large, custom or complex builds.

If your building contract proposes more stages than the standard, please run it by our mortgage broker. Additional stages may affect your construction loan borrowing power and lender options. Some lenders will not accept these changes, and others may have limits on the changes they will accept.

  1. Get in touch with our mortgage broker for your obligation free initial phone consult
  2. Use our secure client portal to provide your details and supporting documents
  3. We will prepare a detailed preliminary assessment and present your home construction loan options
  4. Once you’ve selected a lender, we will prepare your application and lodge everything to the bank
  5. The bank will issue approval and we will co-ordinate the loan documents and everything else required to get your loan ready to fund
  6. When your construction begins, we will manage the payment of your builder at each stage of the works through to completion
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Most residential building contracts are subject to the 6 stages outlined below. The exact definitions for each stage of the build will be detailed in your contract.

Deposit Stage

This is your initial payment. A portion of this is typically due before the builder commences work on site.

The payment made at the deposit stage is used to fund soil tests, initial plans, surveyors and more. Once construction is ready to commence, the remainder of the deposit stage will fall due. This will be used to pay for materials, earthworks and site setup.

In a standard contract in QLD, the Deposit Stage is set at 5% of the total contract value.

Base Stage 

This progress payment generally falls due once the builder has completed the foundation of your new home.

For most people, this stage is where you contribute the remainder of your deposit, and the construction loan payments take over. This is also a very exciting stage of the project because a portion of your new home is now visible on site! Note – this stage is sometimes called the Slab Stage. 

In a standard contract in QLD, the Base Stage is set at 15% of the total contract value.

Frame Stage

The frame stage payment is due on completion of the house framing. The size of the house and roof supports are clearly visible when this is complete. The wall and roof frames are fixed to the slab, and all tie downs and bracing are finalised.

In a standard contract in QLD, the Frame Stage is set at 20% of the total contract value.

Enclosed Stage

This stage is generally marked by:

  • The roof covering being installed
  • External wall cladding completed (bricks, render, weatherboard, etc.)
  • Structural flooring completed
  • External windows and sliding doors are installed

In a standard contract in QLD, the External Linings stage is set at 25% of the total contract value.

Fixing Stage

The fixing stage is generally marked by:

  • Internal linings and cornicing/skirting completed
  • Doors, cabinetry and cupboards installed
  • Wet areas and tiling completed

The fixing stage may exclude baths, benchtops and splashbacks, which will be completed prior to practical completion.

In a standard contract in QLD, the Fixing Stage is set at 20% of the total contract value. 

Practical Completion Stage

The practical completion stage is essentially when the build is complete.

The property will generally be in compliance with the plans and specifications, and it should be without defects (excluding minor cosmetic defects that don’t affect the liveability of the property – these will usually be rectified by the builder before you move in).

In a standard contract in QLD, the Practical Completion stage is set at 15% of the total contract value.

  • Consider getting a preliminary assessment completed with your mortgage broker before you discuss home building options with your builder.
  • Have your documents in order including your building contract, plans and specifications to avoid any delays
  • Talk to your mortgage broker before your sign the building contract to make sure it is structured appropriately
  • Make sure you have budgeted for rental expenses and have somewhere to live while your home is being built

Building a new home is a great way to get into the property you’ve always been dreaming of! Check out our calculators to see your construction loan borrowing power, or chat to Simplifi Lending to find out more.

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How is the construction payment progress payment schedule calculated?

The amount of the total contract value payable to the builder at each stage can vary contract to contract. There are limits on what the builder can charge at each stage but generally, they will be close to the percentages detailed above. The full details will be included in your building contract from your chosen builder.

Custom or complex builds may have either additional stages added in or different percentages charged through the contract. If your build is a custom build, ask us to check the contract before you sign it so we can make sure it meets lender guidelines and requirements.

How do construction loans work?

Construction loans work similarly to conventional mortgages. The main difference is that the lender will use your building plans and contract to determine the value of the property you’re constructing.

Once the lender has determined your eligibility and the value of the property, they’ll approve you for a loan amount that covers the cost of your contract. This amount is not paid to the builder as a lump sum. Instead, it’s released in stages as construction progress payments.

During construction, you are generally charged only the interest on the amount that has been drawn down and paid to the builder. Depending on the lender, you may only need to start making full repayments on the principal and interest once construction is complete (unless you opt for an interest-only mortgage). Alternatively, some lenders provide interest only for a set period (either 1 or 2 years), regardless of how long the construction actually takes. 

Can I use a construction loan to renovate my home?

Yes! You can use home construction loans to fund renovations, house extensions and knock-down rebuild projects.

How much deposit do I need for a land and construction loan?

You can secure a land and construction loan with as little as 5% deposit.

The amount you need for a deposit depends on your situation and the cost of the construction project. In some cases, it may be cost-effective to begin construction with a 5% deposit. Other times, we may recommend saving a larger deposit before you start building your home.

Speak to our mortgage broker for advice that’s tailored to your financial situation.

How is the builder paid?

One of the features of home construction loans is that the lender releases funds in stages. This means you won’t be able to pay the builder their entire contract fee at once.

Instead, your builder will prepare a contract detailing each stage of the build. Your lender will then inspect the property at the end of each stage. If the lender is happy with the progress, they’ll release a progress payment directly to your builder.

What is a low doc construction loan?

A low doc construction loan is a type of mortgage package that requires less financial documentation about your income, assets and liabilities. These types of loans can be a great option for anyone who’s self-employed.

Opting for a low doc construction loan may come with compromises. For instance, you may pay a slightly higher interest rate, or your borrowing power may be reduced.

Speak to our team if you’re thinking about a low doc mortgage. We’ll make sure it’s the right choice for your situation and help select the ideal package for your new build.

What is the maximum LVR for a construction loan?

In general, most lenders will allow you to borrow up to 95% for construction purposes. Lenders Mortgage Insurance (LMI) is typically payable once you borrow more than 80%.

We will provide you with detailed figures for your loan as part of our preliminary assessment.