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 build uses a construction loan, where funds are released in stages via a progressive drawdown as work progresses. Payments are often interest-only during the build to keep costs manageable.
It's crucial to budget for overruns with a contingency fund of at least 15% and have a lawyer review your building contract. Be prepared for potential delays and the cost of paying two mortgages.
Always choose a reputable Registered Master Builder and secure contract works insurance before construction begins.
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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