Finance your dream home build with specialized construction loans. Phased drawdowns, interest-only during building, and flexible terms.
A construction loan is a specialized mortgage designed for building a home rather than buying an existing one. Unlike a standard mortgage where you receive the full loan amount at once, construction loans release funds in phased drawdowns as construction progresses.
💡 Key Insight: During construction, you typically pay interest only on the amount drawn so far. Once construction is complete, the loan converts to a standard mortgage with principal + interest payments.
Instead of receiving the full loan amount upfront, funds are released at key construction milestones:
⚠️ Important: Banks require verified invoices and sometimes site inspections before each drawdown. Keep all receipts and contractor documentation organized.
| Component | Financing Available | Your Contribution |
|---|---|---|
| Land value (if owned) | Up to 80% of land value counts as equity | 20% of land value (imputed) |
| Construction costs (BOQ) | Typically 80-90% | 10-20% cash deposit |
| Total financing | Up to 90% of total project (land + construction) | 10-20% cash + land equity |
💡 Pro Tip: If you already own the land, its value serves as your deposit. You may need little to no additional cash beyond construction costs.
⚠️ Always budget a contingency fund of 10-15% above your BOQ. Construction almost always costs more than initially estimated.
💡 Pro Tip: HF Group (Housing Finance) specializes in construction loans. They have more experience with drawdown structures and site inspections than general-purpose banks.
If you already own a home but need financing for major renovations or extensions:
💡 Pro Tip: Some banks offer "home improvement loans" as personal loans (not secured by property). These have higher interest rates (15-20%) but faster approval.
Some banks allow owner-builders, but they typically require proof of construction experience or a background in building. Most banks prefer licensed contractors.
You are responsible for cost overruns. That's why we recommend a 10-15% contingency fund. Some banks may offer additional financing, but not guaranteed.
Longer than standard mortgages — typically 6-10 weeks. The bank must review architectural plans, BOQ, contractor credentials, and conduct multiple valuations.
You continue paying interest-only during the delay. Most banks allow 12-24 months for construction. Extensions may incur fees.
Calculate your construction costs and explore financing options.