Home Loans

Personal Loans

Car Loans

Credit Cards

Home Insurance

Car Insurance

Health Insurance

Life Insurance

Travel Insurance

Pet Insurance

Account & Transfers

Travel products

Superannuation

Investing

Calculators & Tools

Verticals

About Us

Canstar Blue

Compare Construction Home Loans Background

Compare Construction Loans

Looking for a loan to build or renovate? The table below shows construction loans from our online partners.

Joshua Sale

Group Manager, Research & Ratings

Nina Rinella

Editor-in-Chief

Instantly compare 5400+ Canstar expert rated loans based on the inputs below

Loan amount

via a Canstar Certified Mortgage Broker

PROMOTED

Low variable interest rate
Low fees
Flexible options

Fees & charges apply, Australian Credit Licence 229882

via a Canstar Certified Mortgage Broker

PROMOTED

Keep it simple with no ongoing fees
$0 ANZ set up or ongoing fees
Competitive interest rates

Fees & charges apply, Australian Credit Licence 234527

via a Canstar Certified Mortgage Broker

PROMOTED

$0 monthly and annual fees
Unlimited repayments and redraw
Fast approval

Fees & charges apply, Australian Credit Licence 233714

Hume Bank | Liteblue | Owner Occupied | LVR 60-80% | Variable

via a Canstar Certified Mortgage Broker

Fees & charges apply, Australian Credit Licence 244248

via a Canstar Certified Mortgage Broker

Fees & charges apply, Australian Credit Licence 229882

Macquarie Bank | Basic Home Loan | Owner Occupied | LVR ≤60% | Variable

More details

Fees & charges apply, Australian Credit Licence 237502

Macquarie Bank | Basic Home Loan | Owner Occupied | LVR 70-80% | Variable

More details

Fees & charges apply, Australian Credit Licence 237502

Macquarie Bank | Offset Home Loan | Owner Occupied | LVR ≤60% | Variable

More details

Fees & charges apply, Australian Credit Licence 237502

Macquarie Bank | Offset Home Loan | Owner Occupied | LVR 60-70% | Variable

More details

Fees & charges apply, Australian Credit Licence 237502

via a Canstar Certified Mortgage Broker

Fees & charges apply, Australian Credit Licence 234527

Teachers Mutual Bank | Your Way Plus Home Loan | Owner Occupied | LVR 60-80% | Variable

via a Canstar Certified Mortgage Broker

Fees & charges apply, Australian Credit Licence 238981

via a Canstar Certified Mortgage Broker

Fees & charges apply, Australian Credit Licence 233714

Showing 9 of 257 results

Available

Not available

Data not captured

Canstar rating

Unsure of a term in the above table? View glossary

The initial results in the table above are sorted by Star Rating (High-Low) , then Comparison rate^ (Low-High) , then Provider Name (Alphabetical) . Additional filters may have been applied, see top of table for details.

What is a construction loan?

A construction home loan is a type of home loan designed for people who are building a home or doing major renovations, as opposed to buying an established property. It has a different loan structure to home loans designed for people buying an existing home.

A construction loan most commonly has a ‘progressive drawdown’. This means you may receive instalments of the loan amount at various stages of construction, rather than receiving it all at once at the start. You generally only pay interest on the amount that is drawn down, as opposed to on the whole loan amount. Some lenders may also ask you to make contributions to the loan from your own savings, or to provide evidence that you will be able to afford the full loan amount.

A number of lenders offer construction loans that are interest-only during the construction period and then revert to a standard principal and interest loan once your home has been fully built.

Of course, a construction loan is just one potential source of funding for your project. You may also be eligible for government grants and concessions, particularly if you are a first home buyer, for example. Or, for renovators, there could be the option to refinance an existing mortgage or take out a personal loan. It could be a wise idea to seek professional financial advice when considering your options.

How to get a construction loan?

Getting approved for a construction loan is generally a different process to applying for a standard home loan to buy an existing home.

You’ll typically need to provide the lender with documents, including council-approved plans and building specifications, a copy of your fixed-price building contract with a licensed builder, and any applicable insurance documentation (such as a copy of your builder’s public liability insurance and builder’s risk insurance). You’ll also be subject to normal lending criteria, meaning you will most likely need to provide details of your income and expenses and your credit score could prove an important factor.

A property appraiser will then typically estimate the expected value of the property when completed. This is because when you apply for a construction loan, the lender may consider the expected value of the property upon completion of construction, as well as the total amount required to borrow in order to pay the builder. The lender will typically also require further property valuations and inspections during the project.

If your loan is approved, your lender will give you a loan offer. You will then have to make a deposit, as you would with most other types of home loans. This acts as a form of security at this stage of construction. A larger deposit can help to convince your lender that you are a less risky borrower. You’ll typically need at least a 5% deposit, keeping in mind that you may have to pay lender’s mortgage insurance if your deposit is less than 20%.

For each stage of the construction process, you’ll usually have to confirm that the work has been done, complete and sign a drawdown request form, and send it to the construction department of your lender. Your lender may also request an invoice from your builder for the cost of the work done.

Get your free credit score

Frequently Asked Questions about Construction Loans

Once a construction loan has been approved and the property is being built, lenders will generally make progress payments throughout the various stages of construction. Progress payments will typically be paid directly to the builder at the completion of each stage, and the borrower will then need to pay the money back to the lender, along with interest and any fees that may apply.

According to major lenders Westpac and Commonwealth Bank, some of the typical stages or milestones at which a lender may make progress payments under a construction loan include:

Slab down, foundations or base: This is an amount to help you lay the foundation of your property. It can cover the levelling of the ground, as well as the plumbing and waterproofing of your foundation.
Frame: This is an amount to help you build the frame of your property. It can cover partial brickwork, the roofing, trusses and windows, as well as insulation.
Lockup: This is an amount to help you put up the external walls, and put in lockable external windows and doors (hence the term ‘lockup’, to make sure your house is lockable).
Fitout or fixing: This is an amount to help you install the internal fittings and fixtures of your property. It can cover plasterboards, the part-installation of cupboards and benches, plumbing, electricity and gutters.
Completion: This is an amount for finalising contracted items (such as final payments for builders and equipment), as well as any finishing touches such as fencing, painting and overall cleaning.

As most construction loans are progressively drawn down, interest at any given time is normally calculated based only on the funds used up to that point. For example, if by the third progress payment only $150,000 has been drawn down on a $300,000 loan, interest would only be charged on $150,000, minus however much the borrower had already paid back.

You may be able to use a standard home loan if you have positive equity (meaning your property is worth more than you owe on it) in an existing standard home loan. For example, this could be the case if you already have a home loan that you’ve mostly repaid on an existing home, and you are hoping to refinance that loan to build a new property. You’ll most likely need to have enough equity to be able to borrow the amount that you need without using your to-be-constructed house as security.

Alternatively, Westpac notes that if you have enough equity in a loan on the block of land itself, or in other assets such as investment properties, then you may be able to borrow the funds for your construction, whether progressively or all at once, by topping up an existing home loan and without using the new property you’re building as security.

A possible advantage of doing this is that you are able to pay construction costs as and when they fall due, including smaller incidental costs along the way. This may be an advantage for owner-builders or those who are DIYing a portion of the construction.

A potential disadvantage is that by fully drawing down the home loan from day one, you are also paying interest on the full loan amount from day one. This could be mitigated by placing any not-yet-spent construction money into a 100% offset account against your loan, although not every lender necessarily offers this and there can sometimes be additional costs associated with it.

You could also consider refinancing a construction loan into a standard home loan once your home is fully built, after weighing up your decision and factoring in any fees or other additional costs that could apply. You may be able to find a lower rate by comparing your options.

Compare Home Loans

One type of construction loan is an owner-builder loan, which is specifically designed for people who intend to build the house themselves without the help of a professional third-party builder. In this case, the term ‘owner-builder’ generally refers to people who are not registered or licensed builders.

Many lenders only finance construction of homes that are built by licensed builders. Lenders may be hesitant to accept applications for owner-builder loans, as they use the property as security against your mortgage, and the value of this security may be less certain if the builder is not licensed. This means if you’re building the property yourself and you aren’t a licensed builder, lenders may consider you to be a higher risk.

Lenders who do give owner-builder loans may limit the maximum loan to value-ratio for them. This means you may need to pay a higher deposit than you would for a typical construction loan. An additional interest rate loading or extra fees may also apply to owner builders.

A key difference between construction loans and other kinds of home loans is in the way that they are structured. They generally operate with what is known as a ‘progressive drawdown’ or ‘progress payments’, meaning that the funds will be released in stages, as different milestones are hit in the construction project, rather than all in one go. This means that you will only pay interest on the amount of the loan that has been released, not the whole amount. Some lenders may even offer construction loans that are interest-only during the construction period, and revert to principal and interest once the project has been completed.

Latest in home loans

Latest

What are the average interest rates on home loans?

If you’re keen to compare interest rates, we’ve taken a look at Canstar’s database, and found there’s a big difference between the highest and lowest rates.

Alasdair Duncan

16 April

Alasdair Duncan16 April

When will interest rates go down?

Alasdair Duncan

9 April

Alasdair Duncan9 April

Interest rate forecast: where will interest rates go?

Alasdair Duncan

9 April

Alasdair Duncan9 April

Interest rate forecast: when will rates increase in Australia?

Alasdair Duncan

9 April

Alasdair Duncan9 April

View all in home loans

Canstar Star Ratings and Awards

Looking for an award-winning product or to switch providers or brands? Canstar rates products based on price and features in our Star Ratings and Awards. Our expert Research team shares insights about which products offer 5-Star value and which providers offer outstanding value overall. We also reveal which providers have the most satisfied customers in our dedicated Customer Satisfaction Awards.

Home Loan Awards Refinance Home Loan Awards

Explore more home loans:

Summerland Bank Home Loans & Rates

Home loan options

Family home guarantee Home Loans

Unloan home loans

Home Loans for First Home Buyers

Compare Fixed Rate Home Loans

Compare Investment Property Home Loan Rates

Refinance Home Loan Comparison

Compare 90% LVR home loans

Compare home loans with offset accounts

Compare split home loans

Aussie Home Loans & Rates

About the authors

Nina Rinella, Editor-in-Chief

As Canstar’s Editor-in-Chief, Nina heads up a team of talented journalists committed to helping empower consumers to take greater control of their finances. Nina has written countless articles about finance and has been interviewed on finance topics by media organisations including The Australian, Realestate.com.au, Domain, the Herald Sun and the Sydney Morning Herald. Previously Nina founded her own agency where she provided content and communications support to clients around Australia for 8 years. She also spent four years as the PR Manager for American Express Australia, and has worked at a Brisbane communications agency where she supported dozens of clients, including Sunsuper and Suncorp. When she’s not dreaming up ways to put a fresh spin on finance, she’s taking her own advice by trying to pay her house off as quickly as possible and raising two money-savvy kids. Nina has a Bachelor of Journalism and a Bachelor of Arts with a double major in English Literature from the University of Queensland. She’s also an experienced presenter, and has hosted numerous events and YouTube series. You can follow her on LinkedIn, Instagram or Twitter and Canstar on Facebook. Meet the Canstar Editorial Team. Have a media enquiry, and interested in featuring Nina as a financial expert and commentator? Contact Canstar’s Media Team today.

Joshua Sale, Group Manager, Research & Ratings

As Canstar’s Ratings Manager, Josh Sale is responsible for the methodology and delivery of Canstar’s Home Loans Star Ratings and Awards and the Home Loan Refinance Awards. With tertiary qualifications in economics and finance, Josh has worked behind the scenes for the last five years to develop Star Ratings and Awards that help connect consumers with the right home loan for them.

Josh is passionate about helping consumers get hands-on with their home loans, always reminding home buyers that finding the right loan can be as important for your finances as negotiating a fair property purchase price. Josh has been interviewed by media outlets such as the Australian Financial Review, news.com.au and Money Magazine, discussing topics including home loan equity and wider finance trends.

When it comes to Josh’s own property journey, the home loans expert once bought two houses in the same transaction when he ensured the cubby house his daughter loved was listed on the purchase contract for his new home.

You can follow Josh on LinkedIn, and Canstar on Twitter and Facebook.

Thanks for visiting Canstar, Australia’s biggest financial comparison site*

Important information

For those that love the detail

This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.

Canstar may earn a fee from its Online Partners for referrals from its website tables, and from sponsorship or promotion of certain products. Fees payable by product providers for referrals and sponsorship or promotion may vary between providers, website position, and revenue model. Sponsorship/promotion fees may be higher than referral fees. If a product is sponsored or promoted, it’s an ad and it is clearly marked as such. An ad might appear in different places on our website, such as in comparison tables and articles. Ads may be displayed in a fixed position in a table, regardless of the product's rating, price or other attributes. The location of an ad doesn’t indicate any ranking or rating by Canstar. Payment of fees for ads does not influence our Star Ratings. See How We Get Paid to find out more.

Home loan Star Ratings are updated monthly. The results don’t include every provider in the market and we may not compare all features relevant to you. Current rates and fees are displayed and may be different to what was rated. You can find a description of the initial sort order below the table. You can use the sort buttons at the top of each column to re-order the display. Learn more about our Home Loans Star Rating Methodology. The rating shown is only one factor to take into account when considering products. The table defaults to display only home loans available to somebody borrowing 80% of the total loan amount but you can use the filters to change this. Similar products might have different features and fees depending on the amount you borrow. Contact the lender for details.

The products and Star Ratings in the table might not match your exact inputs in the selector. Sometimes the methodology uses profiles with categories or bands (e.g. income, loan amount or monthly spend), but sometimes a single methodology, without any categories or bands, is applied. The results will show the products that most closely match your selection, based on our profiles. If you are unsure about any terms used in the comparison table please refer to the glossary.

What is a Target Market Determination?

A Target Market Determination (‘TMD’) is a document that explains which people particular financial products may be suitable for (the target market) and sets out any conditions around how financial products can be distributed to consumers.

Why do product issuers provide Target Market Determinations?

From 5 October 2021, TMDs are compulsory for most financial products.

Issuers and distributors of financial products must take reasonable steps that are likely to result in financial products reaching consumers in the target market defined by the product issuer.

We recommend that you consider the TMD before making a purchase decision. Contact the product issuer directly for a copy of the TMD.

Any advice on this page is general and has not taken into account your objectives, financial situation or needs. Consider whether this general financial advice is right for your personal circumstances. Canstar provides information about credit products. We’re not suggesting or recommending a particular credit product for you. If you decide to apply for a loan, you will deal directly with the provider, not with Canstar. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. It’s important you check rates and product information directly with the provider. For more information, read our Detailed Disclosure. ^Read the Comparison Rate Warning.

Before you elect to terminate or modify existing lending arrangements, we recommend you consider (i) your personal circumstances, and (ii) any associated fees, exit costs and application costs that may be applicable as well as the impact these changes could have on you. We suggest you consider seeking independent advice from a qualified adviser.

“Interest-only loan” generally means a loan where you will only pay interest during the interest-only term. That means you won’t be making payments which reduce debt during the interest-only term.

On some Home Loan products, you can choose to be referred to a mortgage broker who has been certified by Canstar according to our certification process. Mortgage brokers may not be able to offer loans from every provider. The loans included in the table are loans that Canstar Certified Mortgage Brokers can discuss with you, if you choose to do so. There may be more suitable loans for your personal circumstances.

If a broker successfully completes the Canstar certification process, they may pay Canstar a fee to use the official Canstar Certified Mortgage Broker badge. Canstar may earn a fee from the Canstar Certified Mortgage Broker, or the broker group they are affiliated with, if you settle a Home Loan via a Canstar Certified Mortgage Broker after being referred to the broker by Canstar. Fees payable may vary depending on the home loan product and product provider.

Not all mortgage brokers available in the market have undertaken the certification process. Canstar has invited a limited number of brokers to undertake the process, and only those brokers who have successfully completed the certification process are entitled to use the logo and wording “Canstar Certified Mortgage Broker”. Being certified as a Canstar Certified Mortgage Broker is not a representation that the holder’s mortgage broking services are superior to all other brokers who do not hold the certification.

Canstar Certified Mortgage Brokers are independent contractors, operate under their own Australian Credit Licence, or as Credit Representatives under an Australian Credit Licence, and are not Canstar’s agent or representative. They are not Home Loan product providers, but they can make recommendations to you about Home Loan products that may suit your needs. The broker may require you to enter into an agreement with them in relation to the services they can provide. Canstar will have no knowledge of or input into the advice and product recommendations you receive from a Canstar Certified Mortgage Broker.

If you choose to be referred to a Canstar Certified Mortgage Broker, you will be taken to have accepted Canstar’s Terms of Use.

Your use of the Canstar Group’s Mortgage Broker Referral tool does not mean that you will be eligible to be approved for any particular home loan.

My Account | Canstar View

*We are Australia’s Biggest Financial Comparison Site. Click here to learn more

This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you. Consider the product disclosure statement and target market determination before making a purchase decision. Canstar provides an information service. It is not a credit provider, and in giving you information about credit products Canstar is not making any suggestion or recommendation to you about a particular credit product. Research provided by Canstar Research AFSL and Australian Credit Licence No. 437917.

Compare Construction Loans

Home Loans

What is a construction loan?

How to get a construction loan?

Frequently Asked Questions about Construction Loans

How do progress payments work on a construction loan?

Can you use a ‘standard’ home loan instead of a construction loan?

What is an owner-builder mortgage?

How is a construction loan different from a normal home loan?

Latest in home loans

Latest

What are the average interest rates on home loans?

Alasdair Duncan

Alasdair Duncan16 April

Popular

When will interest rates go down?

Alasdair Duncan

Alasdair Duncan9 April

Interest rate forecast: where will interest rates go?

Alasdair Duncan

Alasdair Duncan9 April

Interest rate forecast: when will rates increase in Australia?

Alasdair Duncan

Alasdair Duncan9 April

Canstar Star Ratings and Awards

Explore more home loans:

Summerland Bank Home Loans & Rates

Home loan options

Family home guarantee Home Loans

Unloan home loans

Home Loans for First Home Buyers

Compare Fixed Rate Home Loans

Compare Investment Property Home Loan Rates

Refinance Home Loan Comparison

Compare 90% LVR home loans

Compare home loans with offset accounts

Compare split home loans

Aussie Home Loans & Rates

About the authors

Nina Rinella, Editor-in-Chief

Joshua Sale, Group Manager, Research & Ratings

Thanks for visiting Canstar, Australia’s biggest financial comparison site*

Advertiser Disclosure

Home Loans Star Ratings & Sort Order

Target Market Determination (TMD)

Detailed Disclosure & Comparison Rate Warning^

Modifying existing arrangements

Interest-only loan

Canstar Certified Mortgage Brokers