How does finance work when building a new home

Financing a new build uses a construction loan, which is different from a standard mortgage. Funds are paid to your builder in stages through a progressive drawdown as work is completed, with interest-only payments often available during the build.

It's crucial to budget for a contingency fund of at least 15% to cover potential cost overruns. Before starting, have a lawyer review your building contract and ensure you choose a reputable, experienced builder to help your project run smoothly.