How does finance work when building a new home

Financing a new home build typically involves a construction loan. Unlike a standard mortgage, funds are released in stages via a progressive drawdown to pay builders as work progresses. You can often make interest-only repayments during the build.

It's crucial to budget for unexpected expenses with a contingency fund of at least 15% of the build cost. Have a lawyer review your building contract to understand price fluctuation clauses and timelines.

Choosing an experienced, registered master builder is vital.