Construction Loans

MortgageBiz has a range of flexible variable rate home loans to suit owner-occupiers and investors.
Lenders consider the total amount required to pay the builder.
The amount is broken down into progress draws.
Only pay the interest due on the amount withdrawn.

Why get a construction loan?

A construction loan is a mortgage agreement designed specifically for those who are building a new home or renovating. 

With a construction loan, the lender considers the total amount required to pay the builder to complete construction. This amount is then broken down into progress draws which are made at each phase of the building process to the builder. It is common that the lender will only require you to pay the interest due on the amounts drawn. 

When planning with your builder, the contract should include a clear outline of the stages of building and when these stages will be complete. 
There are usually five stages:

1) Foundation
2) Frame and Brickwork.
3) Lockup
4) Second fix
5) Completion

For example, your loan is for $300,000 and your first invoice is for $55,000, the interest will be calculated on your account balance of $55,000 as well as fees. Full principal and interest payments are calculated once the house is completed. 

The construction home loan process

Application
Boost your chances of approval by knowing what’s required. Much like a traditional home loan, your lender will have a look at your income and savings, to judge your capacity for repayment. However, additional documents will be needed for a construction loan, such as a fixed-price building contract, building plans approved by the Council, a copy of your builder’s license, etc.
Making progress payments
Once your loan is approved, funds will be provided in a series of payments. These will be made at various milestones of the building process, outlined in your building contract. The six stages of construction are typically the preparation, followed by the slab (or base floor), frame, lock-up, fit-out, and finally, completion.
Home is complete
Before making the last progress payment to your builder, your lender will inspect the property and need a few last documents for a final valuation. Once the final payment is made, your loan will switch to the standard home loan or loan package that you have agreed upon.
You are now free to move in!
Celebrate with friends and family, and make a fresh start in your brand-new home!

Our Loan Process

MortgageBiz.com.au makes applying for loans simple so that you can focus on your goals not spend time worrying.
1. Apply online
Our loan application process is entirely online via our innovative web app.
2. Talk to a lending specialist
Talk to a loans.com.au lending specialist in our Australian-based call centre
3. Goodbye paperwork!
Upload your documents and track your progress in app
4. Quick pay out
Upload your documents and track your progress in app
5. Smart Money
Access your new account via Online Services

Get started

Apply online or speak to one of our Australian based loan specialists who will take care of all the paperwork for you. Applying is easy and we can settle your loan quickly so you start saving sooner. With mortgagebiz.com.au you can have confidence in dealing with Australia's largest non-bank lender.
How much can I borrow?
It takes less than 3 minutes to calculate your borrowing power!
Ready to apply or want pre-approval?
Give us a call on 1300 740 032 or start an online application.

How MortgageBiz Process works

1. Information Gathering & Preparation

The key to a smooth approval process is preparation - so it's important to
give some prior thought to your individual circumstances, such as:

  • Your Income & Expense.
  • How much you've saved for a deposit.
  • Loan features that appeal to you. e.g. flexibility, access.
  • Your current and future lifestyle requirements.
  • The information and documentation you are required to provide.
2. Conversation With A Home Loan Specialist

It's now time to discuss your home loan requirements and
objectives with a Home Loan Specialist

This step is an opportunity to discuss:

  • Your ability to comfortably make loan repayments - we'll consider a range of factors including income, expenses and liabilities, and any foreseeable changes to your financial circumstances.
  • The purpose of the loan.
  • Loan types, features, costs, and risks.
  • Your future needs.
  • The information and documentation you are required to provide.
3. Applications

This is where you, together with your Home Loan Specialist, complete, sign, and date the home loan application form and submit all necessary supporting documents for approval.

4. Approvals

Once we receive your application and all required documentation, we will verify the information provided (to ensure it meets our credit policy and requirements) and undertake a credit check if it's required. We will also confirm any conditions on the loan, and, if necessary, undertake a valuation on the property and conduct any title searches.

Your Home Loan Specialist will advise of any additional information required. When formally approved, you will receive a call from your MortgageBiz Home Loan Specialist.

5. Documentation

This is when the home loan contract is issued. We recommend that you check all your home loan documentation thoroughly, before signing, dating, and returning it to us. Check that everything is signed correctly.

6. Settlement

Once all our requirements are met, the loan funds will become available to you. You or your solicitor will need to make arrangements for any settlement with the lender. MortgageBiz will be assisting you all thru the process.

Frequently Asked Questions

Can’t find the answer you’re looking for? Reach out to our customer support team.
What is a Redraw Facility?
A redraw facility is a home loan feature attached to your mortgage that gives you the opportunity to make extra repayments on your home loan. This helps reduce interest costs. You then have the option to 'redraw' the extra funds.
How is a redraw facility different to an offset account?
A redraw facility acts in a similar way to an offset account by reducing the loan balance used to calculate the amount of interest payable, however, there are significant differences. A redraw facility may be imposed with limitation to the withdrawal amount and the number of redraws allowed per year. You may also be charged a fee for each redraw and can experience a wait for the funds to come through.

Compared to an offset account this is much less flexible and accessible, as an offset is generally set up as an everyday transaction account. Although, keep in mind that the convenience of an offset account may come at the costs of higher interest rates or additional account keeping fees.

Generally speaking, a redraw facility is less suited for investment home loans, because of its potential tax implications. However, it's worth doing the sums to see which one works better for you. Or better still, let a home loan expert crunch the numbers for you.

Need some help?

Our experts will help you search, choose and settle your home loan online. Chat to one of our Home Loan Specialists at a time that suits you.
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