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Thinking of building your own home or investment property? Discover how construction loans work and how DPN can help you finance your build with confidence.
If you're planning to build a home—whether it's your forever residence or an investment property—understanding how construction loans work is essential. Unlike a traditional home loan used to buy an existing property, a construction loan is purpose-built to support the unique financial needs of a build, releasing funds in stages as construction progresses.
At DPN, we oversee the construction of over 170 investment dwellings every year across Australia, including duplexes and dual income properties. Backed by a team of experienced mortgage brokers who specialise in construction loans, we’re here to guide you through the process from the ground up.
Construction loans differ from standard home loans in how and when funds are released. Rather than receiving the full loan upfront, your lender will provide funds progressively throughout the build in what’s known as progress payments. These payments correspond to specific stages of the construction process.
Here’s a typical breakdown of the five key stages:
This covers site preparation,excavation, plumbing, and laying the concrete slab foundation.
At this stage, your home’s frame takes shape. Structural beams, roof trusses, and external/internal walls are installed to outline the floorplan.
The home becomes secure and weatherproof. External walls, doors, windows, and roofing are added, allowing the property to be “locked up.”
The interior starts to take form with plastering, cabinetry, tiling, kitchen and bathroom fittings, and electrical and plumbing installations.
Final touches like painting, flooring, external works (driveways, landscaping), and appliances are completed. A final inspection prepares the home for handover.
Note: These stages can vary slightly depending on your builder and contract terms. Always refer to your individual building contract.
At each stage, your lender willinspect the completed work before releasing the corresponding progress payment.This helps ensure the build stays on schedule and within budget.
During the construction phase,the loan typically functions as interest-only, which means you’ll only pay interest on the funds disbursed to date. Once the home is complete, it generally reverts to a principal and interest repayment structure.
Applying for a construction loanis similar to applying for a standard mortgage, but with a few additional documents related to your build. Here’s what lenders generally require:
Each lender has slightly different requirements. That’s where DPN’s mortgage brokers come in—offering expert guidance tailored to your personal and financial circumstances.
It’s important to budget foritems that may not be covered under your construction contract, such aslandscaping, fencing, or appliance upgrades. Having a contingency fund is alsowise, as delays from weather, materials, or labour can affect your buildtimeline and costs.
If you're building in a new development or estate, remember that local amenities like schools or shops might still be under construction when you move in.
Whether you’re an investor building a dual-income property or a homeowner creating your dream residence, a construction loan can make it all possible—with the right support.
At DPN, our experienced mortgagebrokers are construction finance specialists. We’ll help you navigate thedocumentation, deal with lenders, and manage progress payments—ensuring yourbuilding journey is as smooth as possible.
Get in touch with DPN’s Mortgage Brokers today toexplore your construction loan options and start building with confidence.
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