Building a home in WA is exciting, and a construction loan is the finance that makes it happen – releasing funds in stages as your builder progresses.
This complete guide explains how construction loans work, the drawdown stages, the deposit you need, owner-builder options, and how to switch to a standard loan at completion.
As your local Perth broker, The Finance Yogi structures construction finance across 40-plus lenders and keeps every drawdown on track for builds in Wanneroo, Joondalup and Hillarys.
A construction loan approves your total build budget but pays it out in instalments called progressive drawdowns. A valuer confirms each stage is complete before the next payment is released to your builder.
Because you pay interest only on the funds drawn, your repayments start small and grow as the build progresses. A fixed-price building contract makes the whole process smoother, because the lender knows the total cost upfront.
This guide brings the full process together and links to the detail on each part.
Construction finance has more moving parts than a standard loan – valuations, builder invoices and fixed-price contracts all have to line up.
That is where a broker earns their keep: we chase the valuer, manage the lender, and keep your builder paid on time.
At each stage your builder invoices, a valuer confirms the work, and the lender releases that portion of the loan directly to the builder.
See the detail in how construction loans work, and weigh building against buying in building vs buying in Perth.
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After 10 years inside the Big Four banks, I saw how many Perth families missed out or borrowed with the wrong lender. The Finance Yogi exists to change that - we compare the whole market and explain every number in plain English.
Construction loans usually need a deposit similar to a standard home loan – often around 20% to avoid Lenders Mortgage Insurance, though some lenders accept less.
First home buyers building new can also claim the $10,000 First Home Owner Grant, which can form part of the funds, plus stamp-duty savings on the land component.
Plan the numbers: see the First Home Owner Grant WA guide, and estimate repayments with our home loan repayment calculator.
Yes, but fewer lenders offer owner-builder loans and the terms are stricter, because the lender takes on more risk without a licensed builder managing the project.
You will usually need a lower loan-to-value ratio, detailed plans and costings, and evidence you can complete the build. We match you with lenders who support owner-builders.
See the full service on our construction loan broker Perth page.
Setting up construction finance starts with your fixed-price contract and plans. We confirm your borrowing power, secure approval, and structure the drawdown schedule to match your builder’s timeline.
We manage each stage, releasing funds as work is verified, then help you switch to a competitive standard home loan once the build is complete.
When your home is finished, we review your loan and switch you to the sharpest standard rate. Explore everything we offer on our finance services page, or start with a free consultation.
Book a free, no-obligation chat and we will set up a construction loan that keeps your build on track.
Source: building and renovating guidance from ASIC MoneySmart, and owner-builder information from the WA Government. Confirm lender requirements before you build.
