A construction loan is a home loan that releases funds in stages as your builder completes each phase of the build, rather than all at once.
This structure protects both you and the lender: you only pay interest on the money drawn so far, and the lender releases funds only once work is verified. It is the standard way to finance a new build in Perth.
As your local Perth broker, we structure construction loans across 40-plus lenders and keep every drawdown on track.
With a construction loan, the lender 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.
Because you only pay interest on the funds drawn, your repayments start small and grow as the build progresses – which keeps your costs manageable during construction.
It is worth planning for the repayment step-up at completion. During the build your interest-only repayments are modest, but once the loan converts to principal-and-interest they rise, so we help you budget for that from day one.
Construction finance has more moving parts than a standard loan, with valuations, builder invoices and fixed-price contracts to coordinate.
That is exactly where a broker earns their keep: we chase the valuer, manage the lender, and make sure your builder is paid on time at every stage.
At each stage, your builder invoices, a valuer confirms the work, and the lender releases that portion of the loan directly to the builder.
Choosing a fixed-price building contract makes this far smoother, because the lender knows the total cost upfront. We explain why in our building vs buying in Perth guide.
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During construction, most lenders charge interest only, and only on the money released so far. So after the slab stage you pay interest on just that first portion, not the whole loan.
This keeps repayments low while you may also be paying rent elsewhere, then they rise gradually as each stage is funded.
Plan ahead: once the build is complete, the loan usually converts to principal-and-interest, so your repayments step up. Estimate them with our home loan repayment calculator before you commit.
Construction loans typically 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. We explain this in our First Home Owner Grant WA guide.
Owner-builder loans are possible too, though fewer lenders offer them and the terms are stricter. See the full service on our construction loan broker Perth page.
Setting up construction finance starts with your fixed-price building contract and plans. We confirm your borrowing power, secure approval, and structure the drawdown schedule to match your builder’s timeline.
From there we manage each stage, releasing funds as the work is verified so your build never stalls for finance.
We also coordinate closely with your builder and settlement agent, so invoices, valuations and drawdowns line up without the delays that could otherwise hold up construction.
Once your home is complete, we help you switch to a competitive standard home loan. For the full picture, read our complete construction loan guide for WA, or explore our finance services.
Book a free, no-obligation chat and we will set up a construction loan that keeps your build on track.
Source: building and renovating finance guidance from ASIC MoneySmart, and owner-builder information from the WA Government. Confirm current lender requirements before you build.
