Our Solutions

The amount a bank will lend for a construction loan depends on the value of the construction.

Banks will consider your loan-value ratio (LVR) and may require LVRs ranging from 50-75% unless you can provide additional security.

To secure a construction loan you may need to get a mortgage over the land. The construction loan will also be secured by the actual construction.

The lender may also require you to provide personal guarantees, like your home and other investments.

If the loan is the name of a company, all the directors may need to provide personal guarantees for the full loan (as opposed to a pro-rata share).

In Australia, property development loans are similar to other types of loans but they’re secured over structures that are in the process of being built.

You can consult a finance broker to find out more about how property development loans work, to explain your options, and to prepare an application on your behalf.

The stages of a construction loan could vary per project but typical stages are:

• Initial Advance – Typically to refiance the land loan lender prior to construction start
• Design Stage – Progress draw to pay the design consultants upto breaking ground
• Payment of Authority Fees – Prior to starting construction council and utility fees will need to be paid.
• Construction Stage – Monthly progress claims to the builder for works completed.

A construction loan usually lasts as long as the construction does. This could be anything from 12-24 months

If there are delays, like a shortage of workers or materials, the loan may need to be extended.