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Construction Loan

Here are the requirement and basic information you need to know about the construction mortgage. Please keep in mind the location of the property is one of the major factors for approval.

LTV • 50% LTV on raw land, 75% LTV on serviced land

STAGES you will go thru

Step 1: Clearing of the site

Depending on the nature of the land, there may be soil testing, site leveling, and clearing was undertaken prior to actual construction.

Step 2: The slab or base stage

As the name suggests, this is simply when the foundation is laid.

It includes measuring out the design on the site, pouring the footings, under slab drainage, moisture barrier, and special mesh for termite protection.

Step 3: Frame stage

This includes the installation of your internal and external support structure, along with walls, a conduit for electrical and plumbing, the roof frame and sheeting, gutters, and insulation.

Step 4: Lockup stage

It’s at this point where you can literally start “locking up” the property because your windows, doors, and remaining walls will be installed.

It’s also safe for plumbers, electricians, cabinet makers, and other tradesmen to begin fitting out the property.

Step 5: Fit-out or fixing stage

Plumbing, electrical (including lights and power points), and other fixtures and fittings will be installed.

The design features that make the property home will also be added such as cornices, tiling, cabinets and shelving, reveals and architraves.

Step 6: Practical completion stage

This is basically where all painting, installations, and details have been completed and you’re effectively ready to move in.


How much do I pay at each stage?

The amount paid at each progress payment stage is based on a percentage of the total costs of completion. As a general rule, the amount you pay at the different stages of construction is as follows:

The deposit: 5%

The slab or base stage: 15%

Frame stage: 20%

Lockup stage: 20%

Fit-out or fixing stage: 30%

Practical completion stage: 10%

  • Construction loans are fully open and can be repaid at any time.

  • Interest is charged only on amounts drawn. There is no stand-by fee for unused funds.

  • Cost to Complete – This means that there always has to be enough funds available in the loan to complete the construction project. If the cost to complete for example is $100,000, there must be $100,000 available to draw from the loan.

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