Building a new home is one of the most exciting things you'll ever do. But construction finance works differently to a standard home loan — and getting it right from the start can save you thousands and a lot of stress.
A construction loan is a specialised form of finance designed specifically for people building a new home or undertaking major renovations. Unlike a standard home loan where funds are provided in a single lump sum at settlement, a construction loan releases money in stages — known as progress payments — as each phase of the build is completed.
Based in Adelaide, Adelaide Finance Specialists proudly helps clients throughout South Australia and across Australia secure construction loan solutions tailored to their building project. As an experienced construction loan broker, we compare over 60 lenders to find the right structure for your specific build — whether you're building your first home in Mount Barker, a custom home in the Adelaide Hills, or a duplex investment in Prospect.
The primary advantage of this structure is the significant interest saving during the build period. Borrowers are only charged interest on the funds that have been drawn down, rather than the total approved loan amount from day one.
Example:
If a client is approved for a $500,000 construction loan, they will only pay interest on the initial drawdown for the slab (e.g., $100,000) until the next stage is complete and the next payment is made.
Instead of receiving the full loan upfront, your lender releases funds in stages as your builder completes each phase of construction. This protects you and the lender — and means you only pay interest on what's been drawn down.
Your builder completes a stage of construction according to the contract schedule and provides an invoice for that stage.
You provide the builder's invoice to the lender, requesting the next progress payment drawdown.
The lender arranges for a progress inspection or valuation to verify that the work for that stage has been completed to standard.
Once the inspection is approved, the lender releases the funds directly to the builder for that completed stage.
If you are contributing your own funds towards the build, lenders almost always require these funds to be used in full before any portion of the loan is drawn down.
Two things your lender will insist on — and why they matter for your build.
Lenders almost always require a fixed price building contract before approving a construction loan. This document details every aspect of the build, including the total cost, progress payment schedule, specifications, and inclusions.
Why it matters:
Construction loan pre-approval gives you a clear budget before you engage a builder. It shows builders you're a serious buyer and ensures your finance will be ready when the building contract is signed.
The process:
We work with clients building through every major registered builder in South Australia. Each builder has their own contract format, progress payment schedule, and process — and we're familiar with them all.
Building with a different registered builder? No problem — we can help structure your construction loan regardless of which builder you choose.
From deciding to build to collecting the keys — here's how the journey unfolds.
Meet with us for a free, no-obligation consultation. We'll assess your borrowing capacity, explain how construction finance works, and help you set a realistic budget before you start talking to builders.
We submit your application and secure conditional approval. This gives you confidence to engage builders and negotiate your fixed price building contract knowing your finance is ready.
Select a licensed, registered builder. We can help you understand what to look for in a builder and what makes a solid building contract. Remember — lenders require a registered builder.
Once the fixed price contract is signed by both parties, we submit it to the lender along with plans, specifications, and council approvals to move from pre-approval to formal loan approval.
The lender conducts a full assessment and issues unconditional approval. They'll also complete a valuation based on the plans and contract. Once approved, your land can be settled (if applicable) and construction can begin.
The slab is poured and construction is underway. During the build, you'll make interest-only repayments on the funds drawn down — keeping your costs low while the house takes shape.
As each stage is completed (slab, frame, lock-up, fit-out, completion), the builder submits an invoice, an inspection is carried out, and the lender releases the next payment directly to the builder.
The final inspection is completed, the keys are handed over, and your loan transitions from interest-only construction repayments to standard principal and interest repayments. This is also the perfect time to review your loan with us — rates may have improved during the build.
From first enquiry to moving in — here's the path.
Pre-Approval
Know your budget first
Choose Builder
Find the right builder
Fixed Price Contract
Sign with confidence
Formal Approval
Lender signs off
Construction Starts
Slab goes down
Progress Payments
Paid as you build
Move In 🎉
Collect your keys
We've seen these mistakes cost people time, money, and sleep. Here's how to avoid them.
Never sign a building contract or pay a deposit until your finance is pre-approved. We've seen people lose deposits because they couldn't get finance after signing.
The build price isn't the only cost. Factor in site works, soil tests, permits, fencing, driveways, landscaping, window treatments, and flooring — many aren't included in the base contract price.
Builds rarely go exactly to plan. Variations, upgrades, and unexpected site costs happen. Having a 5-10% financial buffer can save you from stress if the build takes longer or costs more than expected.
Not all lenders offer construction loans, and those that do have different policies around progress payments, valuation requirements, and acceptable building contracts. We compare over 60 lenders to find the right fit.
Variations during construction can cause delays and cost blowouts. The lender may need to re-assess if significant changes are made. Get your design and inclusions locked in before the contract is signed.
If you're purchasing land and building separately, you'll need land finance first, then the construction loan. Some lenders package these together, others don't. We'll structure it properly from day one.
Construction finance isn't something every broker understands well. We do — because we've lived it.
At Adelaide Finance Specialists, we have first-hand experience with custom home construction. We understand what happens on a building site — the progress payment stages, the common delays, how variations work, and the real challenges builders and clients face during a build. This isn't theoretical knowledge; it's lived experience that helps us anticipate issues before they become problems.
Each of our 60+ lender panel has different requirements for construction loans. Some want the builder to hold specific insurance. Some require the land to be owned before construction can start. Some won't lend in certain postcodes. Knowing these nuances means we submit your application to the right lender the first time — no surprises, no delays.
Some brokers disappear once the loan is approved. Not us. We're available throughout your build to help with progress payment requests, variation approvals, and any lender queries that come up. When your home is complete, we'll also review your loan to make sure you're still on the best rate — because rates can move during a 12-month build.
Answers to the questions people ask most about building loans.
The construction process is typically broken down into five key stages, with payments released as each milestone is completed.
The site is cleared, levelled, and prepared. Foundations and the concrete slab are poured, including initial under-slab plumbing.
The "skeleton" of the house is constructed, including the internal and external wall frames and roof trusses.
The property is made secure and weatherproof. This involves installing external walls, windows, doors, and roofing.
The internal work is completed. This includes plastering walls, installing fixtures and fittings like cupboards and benches, and completing plumbing and electrical "rough-ins".
The final touches are applied, such as painting, tiling, flooring installation, and fitting of electrical and plumbing fixtures. A final inspection is conducted before the final payment is made.
Getting the right finance structure in place early can save you thousands and avoid delays during your build. Book a free, no-obligation consultation today.