Building in Brisbane? Your Complete Construction Loan Guide

A construction loan is fundamentally different from a standard home loan. Instead of receiving the full loan amount at settlement, funds are released in stages as your build progresses. This is called a progress draw or drawdown.

Key differences from a standard home loan:

• Progressive drawdown: Funds are released to the builder at each construction milestone (typically 5–6 stages)
• Interest-only during construction: You only pay interest on the amount drawn down so far — not the full loan. Your repayments start small and increase as more is drawn.
• Converts to standard loan: Once construction is complete and the final payment is made, the loan converts to a standard principal and interest home loan
• Construction period: Most lenders allow 12–18 months for construction. Extensions are possible but must be approved.
• Fixed-price contract required: Lenders need certainty that the build cost won't exceed the approved amount

Each state has slightly different conventions, but in Queensland the standard progress payment schedule is:

Stage 1 — Deposit (5%)

Paid when you sign the building contract. This secures your builder and locks in the price. Some builders accept less, but 5% is standard. This often comes from your own funds, not the construction loan.

Stage 2 — Base/Slab (15–20%)

Paid when the concrete slab is poured or the base stage is complete. This is the first major drawdown from your construction loan. The lender will send a valuer or require photos confirming the work is done.

Stage 3 — Frame (20–25%)

Paid when the frame is erected — the skeleton of your house. Walls, roof trusses, and the basic structure are in place. At this stage, you can start to see the shape of your home.

Stage 4 — Lock-Up (20–25%)

Paid when the home is "locked up" — external walls, roof, windows, and external doors are installed. The building is weather-tight. Brickwork, external cladding, and rough plumbing/electrical are typically complete.

Stage 5 — Fixing (15–20%)

Internal fit-out — plastering, internal doors, cabinetry, tiling, painting, and fixtures. The home starts to look like a home.

Stage 6 — Completion/Handover (5–10%)

Final payment when the build is complete, you've done your final inspection, and the builder hands over the keys. This triggers the final drawdown and your loan converts to a standard home loan.

Your lender will require an inspection (or documentation) at each stage before releasing funds. This protects you — ensuring the builder has actually completed the work before they're paid.

Standard requirement: 10–20% of the total project cost (land value + building cost)

Example: Land $350,000 + Build $400,000 = $750,000 total

• 20% deposit = $150,000 (no LMI)
• 10% deposit = $75,000 (LMI applies, ~$15,000–$25,000)
• 5% deposit = $37,500 (with First Home Guarantee — no LMI)

First home buyers building new: You may qualify for the First Home Guarantee (5% deposit, no LMI) AND the $30,000 Queensland First Home Owner Grant. Combined, this dramatically reduces what you need upfront.

If you already own the land: The equity in your land counts toward your deposit. If you purchased land for $300,000 and it's now valued at $350,000, that $350,000 equity can form part or all of your deposit requirement.

Knock-down rebuild: If you're demolishing an existing home and rebuilding, the land value in your current property counts as your deposit. Many knock-down rebuild clients need no additional cash deposit at all.

House and land packages (offered by developers like Metricon, Simonds, etc.) bundle the land and building contract together. The advantage is simplicity — one builder, one price, one process.

How financing works:

• The land settles first — you take out a standard loan to purchase the land
• The construction loan is then drawn down in stages as the build progresses
• Many lenders allow you to roll both into a single facility

Buying land and building separately: You choose your own land and your own builder. More flexibility, but requires more coordination. Some lenders offer a combined land-and-construction facility; others require two separate loans.

Which is easier to finance? House and land packages are generally simpler because the builder provides a fixed-price contract, council-approved plans, and a clear timeline. Custom builds with your own builder require more documentation but give you more control.

Yes, but it's significantly harder. Owner-builder finance is considered higher risk by lenders because:

• There's no fixed-price building contract — costs can blow out
• Timelines are often longer and less predictable
• There's no builder's warranty or insurance
• Quality control relies entirely on you

What lenders require for owner-builder loans:

• Higher deposit: Typically 30–40% of the total project cost
• Detailed cost estimate: Prepared by a quantity surveyor or registered builder
• Council-approved plans
• Owner-builder licence (required in QLD for builds over $11,000)
• Construction timeline
• Evidence of your building experience (not always required, but it helps)

Fewer lenders offer owner-builder finance — typically 4–6 on our panel compared to 30+ for standard construction loans. But it IS possible, and we know which lenders are most receptive.

Construction costs have stabilised after the post-COVID surge, but building in Brisbane isn't cheap. Here's what to budget per square metre:

• Budget build: $1,500–$2,000/sqm — basic finishes, standard inclusions, volume builder
• Mid-range: $2,000–$2,800/sqm — quality finishes, some upgrades, project home builder
• Custom/premium: $2,800–$4,500+/sqm — architect-designed, high-end finishes, custom builder

Typical Brisbane new build costs (mid-range):

• 3-bedroom home (150 sqm): $300,000–$420,000
• 4-bedroom home (200 sqm): $400,000–$560,000
• 4-bedroom + study (250 sqm): $500,000–$700,000

These are building costs only — add land value, landscaping ($15,000–$40,000), driveway ($5,000–$15,000), fencing ($5,000–$15,000), and council fees ($5,000–$10,000).

Tip: Always budget a 10% contingency on top of the building contract for unexpected costs — rock excavation, soil issues, or upgrades you decide on during the build.

Can I get a fixed rate on a construction loan?

Most construction loans are variable rate during the construction phase because funds are drawn progressively. Once construction is complete and the loan converts to a standard mortgage, you can then fix all or part of the loan.

What happens if the builder goes bankrupt mid-build?

This is why lenders require builders to hold domestic building insurance (Home Warranty Insurance in QLD). This insurance covers you for unfinished or defective work if the builder dies, disappears, or becomes insolvent. It's a legal requirement for residential building work over $3,300 in QLD.

Can I make extra repayments during construction?

During the construction phase, you typically only pay interest on drawn funds. Most lenders allow extra payments, which reduces the interest you pay. Once the loan converts to a standard mortgage, full extra repayment facilities apply.

How long can construction take before the lender gets concerned?

Most construction loans are approved for a 12–18 month build period. If your build is running behind, you can request an extension — but the lender will want to know why. Significant delays (beyond 24 months) can cause issues.

Can I live on-site during construction?

Not in the house being built — it won't be habitable or insured for occupation until completion. Some people live in a caravan on-site, but check with your council and insurer. Most construction loan borrowers rent or live elsewhere during the build.