Building a home is an exciting journey — but it comes with a unique set of challenges, especially when it comes to finance. Construction loans work differently from regular home loans, with staged payments, lender inspections, and strict documentation requirements.
At Heritage Finance, we guide you through the process from pre-approval to the final drawdown, ensuring your builder gets paid on time and your loan works in step with your build.
Unlike a standard home loan (which is paid in full at settlement), a construction loan is released in stages — this is known as a drawdown structure. As your builder completes each stage of the construction, the lender pays them directly using your loan funds.
This protects you and the lender by ensuring the builder is only paid for completed work.
Lenders may send out an inspector at each stage to verify progress before releasing funds. You’ll only be charged interest on the funds that have been drawn down so far, helping manage cash flow during the build.
A fixed price building contract is a legally binding agreement between you and your builder that outlines the total cost of the construction upfront. It gives both you and your lender clarity and security around the scope of the works and the total cost.
Lenders typically require a fixed price contract before approving a construction loan because it helps:
Make sure your contract includes all known site costs and inclusions — this reduces surprises later.
Tip: Always work with a builder who is licensed, reputable, and experienced with bank-funded projects.
Monitoring drawdowns and progress payments to avoid delays
Whether you’re building your first home, upgrading to a custom build, or planning a knock-down rebuild — we’re here to make the finance side as smooth and stress-free as possible.
Talk to us today about pre-approval and the right lender for your build.
