Construction Loans: The Smart Way to Fund Your Build or Renovation in Sydney
Why Construction Loans Matter for Your New Build or Renovation
There’s something truly special about stepping into a newly built home or completing a major renovation. Fresh paint, brand-new flooring, and the satisfaction of achieving a major milestone—it’s a moment to celebrate!
With building approvals jumping 14.7% between December 2023 and January 2024, many Aussies are rolling up their sleeves and investing in construction or renovation projects.
Meanwhile, on the renovation front, we’re not just upgrading our homes for aesthetics and lifestyle improvements. Almost half of all home renovations in 2023 had a ‘green’ focus, improving energy efficiency (Houzz Research).
But before you enjoy the results of your hard work, you’ll need to decide how to finance your project—and a construction loan could be the perfect solution.
How Do Construction Loans Work?
The Basics of a Construction Loan
A construction loan operates differently from a traditional home loan. Instead of receiving a lump sum upfront, your lender drip-feeds funds in stages to match different phases of the project.
For new home builds, the lender generally makes progress payments across five key stages:
1. Laying the Slab
2. Erecting the Frame
3. Lock-Up Stage
4. Internal Fit-Out
5. Completion & Final Payment
This staged approach offers greater control and financial security—preventing payments for unfinished work and ensuring the builder is completing each stage before receiving funds.
Advantages of Construction Loans
Pay Interest Only on Funds Drawn
During construction, loan interest is only calculated on the funds withdrawn, not the full loan amount. This minimizes interest costs while the project is ongoing.
Interest-Only Payments While You Build
Most construction loans offer interest-only payments while work is underway. This eases financial pressure, especially if you’re renting elsewhere while waiting for your new home.
Protecting Against Builder Risk
Since funds are released in stages, lenders help reduce risk by ensuring builders complete work before receiving the next payment.
What Happens After Construction?
Once your home or renovation is complete, your construction loan transitions into a regular home loan. This process is usually smooth—but not every lender offers competitive construction loan options.
Finding the Best Construction Loan for Your Needs
That’s why speaking to a mortgage broker early in the process can save time, money, and hassle. At CBM Mortgages, we specialize in helping homeowners secure tailored loan solutions, ensuring you get the best rates and terms.
💡 Need help securing a construction loan? Speak to our expert mortgage brokers today. We’ll guide you through lender options, loan approvals, and budgeting strategies!
Get Your Construction Loan Approved Today!
Thinking about building or renovating in Sydney? CBM Mortgages is here to help!
✅ Compare lenders offering construction loans
✅ Secure competitive interest rates
✅ Simplify the application process
📞 Contact CBM Mortgages and let’s get your project funded today!
Internal & External Links for SEO Optimization
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Written by Craig McDonald 12/06/2025
