Often paired with.
Built, paid, settled. A cinch.
A construction loan releases money to your builder in stages as the house goes up, and you pay interest only on what has been drawn. Lenders value the land plus the fixed-price contract as if the home were finished, lend against that, and usually allow 90 to 95 per cent for owner-occupiers with lenders mortgage insurance, 80 per cent without. We line up the loan, the contract and the valuation so the first progress payment is never the first surprise.
The statutory progress-payment schedule for a full build under the Domestic Building Contracts Act, plus the lending rules that sit on top of it.
Figures checked October 2026 against the sources shown. Rules change; we re-check before every application.
The lender approves a total figure for land plus build, then releases it in stages against your builder's invoices, usually after an inspection. You pay interest only on the amount drawn so far, and the loan switches to normal principal-and-interest repayments once the home is complete.
If you already own the land, the loan funds the build only. If you are buying land and building, the land settles first and the construction portion sits undrawn until the builder's first claim. Most lenders allow twelve months for the build and extend if the project runs over, as long as you ask before the deadline rather than after.
Two things lenders will not usually fund: a builder's deposit above the 5 per cent the Act allows, and variations that are not in the fixed-price contract. Both come out of your own pocket, so they belong in the budget from day one.
The lender takes the lower of what the project costs (land plus contract) and what a valuer says it will be worth when finished, then lends up to its maximum loan-to-value against that figure. Your income is tested on the full end loan, with the usual 3-percentage-point buffer.
The "as if complete" valuation is where builds go wrong. A high-spec home on a modest street can cost more than it values, and the gap is yours to fund. We get the valuation ordered early, before you are locked in, and we know which lenders are realistic about new estates and which are not.
A fixed-price building contract from a registered builder, council-approved plans and specifications, a certificate of currency for domestic building insurance on any contract over $16,000, and the usual income and deposit evidence.
The contract matters more than people expect. Lenders want a fixed price, the statutory progress schedule or a reasonable alternative, and site costs included rather than listed as "provisional". A cost-plus contract or a builder who is not VBA-registered will stop most lenders cold, and we would rather tell you that before you pay a deposit than after.
Yes. The $10,000 First Home Owner Grant applies to new homes, including a house-and-land build, up to $750,000, and the Victorian stamp duty exemption applies to the land and contract value for a first home. The First Home Guarantee can also be used for a build within its price cap.
The grant is usually paid at the base-stage progress payment rather than at land settlement, which affects how much cash you need up front. See the first home buyers page for the current thresholds.
Both are construction loans. A knock-down rebuild values the land as vacant plus the contract; a major renovation needs a fixed-price contract and plans just like a new build, while a smaller one can often be funded from equity or redraw without a construction facility at all.
If you are living in the home while it is rebuilt you will need somewhere to live for a year; lenders do not fund rent, so it goes into the budget. If you are demolishing, tell your lender before the bulldozer arrives: the existing loan is secured against a house that is about to disappear.
“We're always looking to find a solution for our clients where other people would just give up.”Suvidh Arora, MPA, 2022
The Cinch five steps, with the valuation ordered early and the progress payments managed for you.
Borrowing power, the right lender for the builder and the estate, and an early "as if complete" valuation so there is no gap to find later.
Formal approval on land plus build. Land settles first if you are buying it; the construction portion waits for the builder.
Each builder invoice goes to the lender, an inspection follows, the stage is paid. On completion the loan rolls to normal repayments and you move in.
Straight answers. If yours isn't here, ask cinchi (bottom right) or book a chat.
Built, paid, settled. A cinch.
I'm cinchi, Cinch Loans' AI assistant. I explain how Australian home loans and finance work, and when a question needs a current figure I check trusted sources like MoneySmart, Housing Australia, the RBA and the state revenue offices, and show you where it came from. Suvidh and the team give the actual advice. Your questions are saved so they can pick up where we left off, and when a question needs a person, I'll put you straight through on WhatsApp.
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cinchi is an AI assistant. It can be wrong. Figures are quoted from the source shown and change over time. Nothing here is personal credit advice or an offer of credit. Credit Guide · Privacy · Talk to Suvidh