What is a construction loan?
A construction loan is a purpose-built home loan designed to fund a property progressively as it’s built, not all at once. Unlike a standard mortgage, funds are released in stages, aligned to verified construction milestones, protecting both the borrower and the lender.
If you’re upgrading or improving an existing property rather than building from scratch, a Renovation Home Loan may be more appropriate.
At Mortgage House, construction loans are structured around fixed-price contracts, independent inspections, and controlled progress payments. This ensures builders are paid promptly for completed work while borrowers only pay interest on funds actually drawn.
How a Construction Loan Works
You are approved for both:
- The construction facility, and
- The end mortgage that applies once construction is complete.
After settlement, funds are held by Mortgage House and released directly to the builder when each stage is completed and verified. Typical stages include slab, frame, lock-up, fixing, and final completion.
Once construction is finished and the Occupancy Certificate is issued, the loan automatically converts to a standard home loan. First home buyers building their first property may wish to review our First Buyer Home Loans.
Why Construction Loans Are Different
- Interest is calculated only on drawn funds, not the full loan
- Payments are made directly to the builder, not to you
- Progress claims are validated by invoices, inspections, and authorisations
- Budget control is strict – cost overruns must be prepaid or approved
This structure protects your asset, your cash flow, and your long-term borrowing position.
Final Drawdown Requirements (What Stops Delays)
To release the final payment, we require:
- Builder’s final invoice with banking details
- Signed Final Claim & Authorisation
- Home insurance noting Mortgage Street Capital Funding Pty Ltd
- Relevant State or Territory Occupancy Certificate
- Confirmation all works are complete and compliant
Incomplete documentation is the number one cause of delayed payments.
Builder Payments, Done Properly
Once all documents are received and verified, funds are typically released within:
- 3–4 business days (standard)
- 8–10 business days if a valuation or inspection is required
This ensures builders are paid promptly while Mortgage House retains the full cost-to-complete buffer, protecting you until the very last stage.
Build with Certainty
Construction loans reward discipline. Stay on budget, submit claims only for completed works, and keep documentation tight. Done correctly, they’re one of the safest ways to turn plans into a finished home.
