Buying guide
How does finance work when building a new home
Finance when building a new home can be complex - here’s everything you need to know.
AI summary
Financing a new home involves a construction loan, which differs from a standard mortgage. Funds are released in stages to pay builders, known as a 'progressive drawdown', with interest-only payments common during the build.
To manage risks, secure a contingency fund of at least 15% for cost overruns and have a lawyer review your building contract. Choosing a reputable builder and arranging contract works insurance before starting are also critical steps for a successful project.
How do construction loans work?
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Finance for new builds works a little differently than your average home loan.
Managing costs during a new build
Choosing your builder
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