Question 1

What is a construction loan and how does it work in Melbourne?

Accepted Answer

A construction loan is a home loan structured specifically for building. Instead of receiving the full amount at settlement, the loan is drawn down in stages — called progress payments — as construction milestones are completed. You only pay interest on the amount drawn at each stage, not the full loan amount, which means your repayments during the build are lower than they will be once the home is complete and you roll to a standard principal and interest loan.

Question 2

What are the progress payment stages for a Melbourne construction loan?

Accepted Answer

Standard progress payment stages in Victoria are typically: (1) Base/slab — 10–15% of loan; (2) Frame — 15–20%; (3) Lock-up — 20–25%; (4) Fixing/fit-out — 20–25%; (5) Practical completion — remaining balance. Your builder's payment schedule drives the actual percentages. We review the builder's schedule at application to ensure it aligns with your chosen lender's payment policy.

Question 3

What is the difference between a house and land package and a knockdown rebuild?

Accepted Answer

A house and land package involves purchasing vacant land (often in a new estate) and contracting a builder to construct a new home. A knockdown rebuild (KDR) involves purchasing or already owning an existing property, demolishing the current structure, and building a new home on the existing land. Both use a construction loan structure with progress payments, but KDR has different LVR and valuation dynamics — the lender values the completed project, not just the land or the shell. KDR is increasingly popular in established Melbourne suburbs where land values are high.

Question 4

What is an owner-builder loan and how is it different?

Accepted Answer

An owner-builder loan is for borrowers who will act as their own builder rather than contracting a registered building company. This is a higher-risk category for lenders — fewer are willing to lend on owner-builder projects, and those that do typically require an owner-builder licence, detailed documentation, and impose lower LVR caps (typically 60–70%). The project cost and timeline documentation requirements are also more rigorous. We identify the right lenders for owner-builder applications on our panel.

Question 5

Can I use the First Home Owner Grant (FHOG) for a construction loan?

Accepted Answer

Yes — the Victorian FHOG of $10,000 applies specifically to new residential construction. If you are a first home buyer building or purchasing a new home valued up to $750,000, you may be eligible. The grant is typically paid at the first progress payment stage. Combining the FHOG with the FHBG (First Home Guarantee, 5% deposit) is a common strategy for first home builders in Melbourne's growth areas. We check your eligibility for all applicable schemes at your first call.

Question 6

How much does it cost to build a house in Melbourne in 2026?

Accepted Answer

Melbourne residential build costs vary by location, specification, and builder in 2026. As a general guide, modest spec builds in Melbourne's outer growth corridors start from $1,800–$2,200/m2. Mid-spec Melbourne suburban builds typically run $2,400–$3,200/m2. Higher specification or knockdown-rebuild projects in established suburbs can reach $3,500–$5,000/m2 or above. These are indicative ranges only — your builder's fixed-price contract is the authoritative figure, and we always base the loan on the contract price.

Question 7

What is the LVR cap for construction loans in Melbourne?

Accepted Answer

Most lenders cap construction loans at 80–90% LVR, meaning you need a minimum 10–20% deposit plus the land purchase costs. With the FHBG or LMI, some lenders will go to 95% LVR for eligible first home builders. LVR is calculated against the end value (completed property value) — this is typically higher than the contract price, which works in your favour in most Melbourne locations. We assess your likely end value LVR at your first call.

Question 8

What documents do I need for a construction loan application?

Accepted Answer

Key documents typically required: signed fixed-price building contract, council-approved plans and specifications, builder's registration certificate and insurance certificates (including home warranty insurance), land title or purchase contract, and standard personal financial documents (payslips or tax returns, identification). We provide a full checklist based on your specific project type at your first call — owner-builder and KDR have additional requirements.

Question 9

What happens to my loan when the construction is complete?

Accepted Answer

Once the builder issues a practical completion certificate and the final progress payment is made, your construction loan converts to a standard home loan. At this point you begin principal and interest repayments on the full outstanding loan balance. The conversion also triggers the lender to arrange a final valuation. We prepare you for this conversion throughout the build so there are no surprises at completion.

Question 10

Can I do a renovation with a construction loan?

Accepted Answer

Yes — substantial renovations (typically structural works, kitchen extensions, or additions) can be financed via a construction facility, often structured as an equity release from your existing home loan with a construction drawdown component. Cosmetic or small-scale renovations are typically financed via a personal loan or equity release refinance without a full construction facility. We advise on the right structure based on your renovation scope and current loan position.

Question 11

Can I build in Geelong or Armstrong Creek with a construction loan?

Accepted Answer

Yes — we actively place construction loans across Greater Geelong including Armstrong Creek, Torquay, Ocean Grove, Lara, and surrounding growth corridors. Armstrong Creek is one of Victoria's fastest-growing residential areas and we have strong experience with builds and house-and-land packages in that area. The Regional First Home Buyer Guarantee may also apply for eligible first home buyers building in Geelong-area postcodes.

Question 12

What is a fixed-price building contract and why do lenders require it?

Accepted Answer

A fixed-price building contract is an agreement where the builder commits to complete the construction for a set price — regardless of material or labour cost increases during the build period. Lenders require fixed-price contracts because they need certainty of the final loan amount and security that the project will complete at the contracted cost. Domestic Building Contracts Act 1995 (VIC) provisions also provide consumer protections within this contract structure. We review builder contracts before submission to identify any terms that may cause issues with lenders.

Question 13

What is a construction loan variation and how does it affect my loan?

Accepted Answer

A variation is a change to the original building contract — adding or removing items, or changing specifications during the build. Variations can increase the total construction cost and therefore require the lender to reassess the loan. Minor variations (usually under $5,000–$10,000 depending on lender) are often manageable without formal lender approval; larger variations may require formal variation documentation and lender sign-off. We advise you on the right process when variations arise during your build.

Question 14

How long does a construction loan take to approve?

Accepted Answer

Construction loan approvals typically take 7–14 business days from full application to formal approval, slightly longer than standard home loan approvals due to the additional documentation required (plans, contracts, builder verification). Settlement of the land component (for house-and-land packages) occurs when the land is ready to settle, and the construction component kicks in as soon as the build commences. We manage the entire timeline around your builder's schedule.

Question 15

What is a progress inspection and does the lender do one?

Accepted Answer

Before releasing each progress payment, most lenders require a progress inspection — either conducted by their own valuer or via submitted photos/documentation from the builder confirming the relevant stage is complete. Some lenders conduct formal on-site inspections at each stage; others accept builder-certified progress claims. We advise you upfront on your chosen lender's inspection process so your builder knows what to expect at each payment release.

Question 16

What if my builder goes out of business during construction?

Accepted Answer

Home warranty insurance (required on all domestic building contracts in Victoria over $16,000) provides protection if your builder becomes insolvent, dies, or disappears during the build. The insurance covers completion of the build or losses incurred. This is a standard condition of construction loan approval, and we verify your builder's insurance at application. If a builder does fail during your build, we can advise on the insurance claim process and options for completing the project.

Question 17

Can I build an investment property with a construction loan?

Accepted Answer

Yes — construction loans are available for investment property builds. The assessment process is the same as for owner-occupied construction, but the LVR cap may be slightly lower for investment builds (typically 80–85%). First home buyer grants (FHOG, FHBG) do not apply to investment builds — you must intend to occupy. Investment construction loans are assessed on both your income and the projected rental yield from the completed property.

Question 18

What is a knockdown rebuild and how do I finance it?

Accepted Answer

A knockdown rebuild (KDR) is where you demolish an existing dwelling on your land and build a new home. For financing, the lender assesses the end value of the completed project. Because KDRs are typically in established suburbs where end values are strong, this often results in a favourable LVR. Financing involves a single construction loan covering demolition and build costs, or — if you own the land free and clear — a loan purely against the construction contract. We assess which structure works best for your KDR scenario.

Question 19

Can I do a subdivision with a construction loan?

Accepted Answer

Subdivision development finance is a specialist area. Small residential subdivisions (2–3 lots) can sometimes be funded through standard construction loan products at higher LVRs. More complex subdivisions typically require a development finance facility assessed on feasibility, presales requirements, and a detailed development report. We have lenders on our panel for both small residential subdivisions and more complex development structures.

Question 20

What is interest-only repayment during construction?

Accepted Answer

During the construction phase, most construction loans default to interest-only repayments — you only pay interest on the amount that has been drawn down (released to the builder as progress payments), not the full approved loan amount. This keeps repayments low during the build period (often 6–12 months). Once construction is complete and the final draw-down occurs, the loan typically reverts to principal and interest repayments on the full balance.

Question 21

What happens if construction takes longer than expected?

Accepted Answer

Most lenders allow a construction period of 12–18 months from the first drawdown. If construction is delayed beyond this, you may need to apply for an extension of the construction term — this is usually straightforward for genuine delays (weather, material supply, council approval). Significant delays beyond the initial construction term can sometimes require a loan reassessment. We manage communication with the lender throughout your build and flag any timeline concerns early.

Question 22

Can I build two dwellings on my block?

Accepted Answer

Dual occupancy and dual dwelling projects (building two separate dwellings on one title) are available through some lenders but assessed more like development finance than standard construction loans. LVR caps are typically lower, pre-sale requirements may apply for certain lenders, and feasibility documentation is required. We assess dual-dwelling projects on their individual merits and identify the most appropriate funding structure from our lender panel.

Question 23

Should I use a broker or go direct to a bank for my construction loan?

Accepted Answer

Construction loan applications are more complex than standard home loans — there are more documents, more stages, and more potential for delays if the application isn't structured correctly from the start. A broker experienced in construction finance ensures the right lender is selected for your project type, the application is prepared correctly, and the progress payment process is managed smoothly throughout the build. Our service is free in most cases — the lender pays us on settlement.

Question 24

What Melbourne areas are popular for construction and KDR in 2026?

Accepted Answer

Knockdown-rebuilds are increasingly active in Melbourne's inner-north and north-west — Coburg, Brunswick, Pascoe Vale, Strathmore, Essendon, and Keilor East — where land values make rebuilding highly viable. Melbourne's outer west and south-east growth corridors remain active for house-and-land packages. In the Geelong region, Armstrong Creek, Torquay, and Lara are seeing strong construction activity. We have direct experience with construction loans across all these areas and understand each market's specific valuation dynamics.

Question 25

Do I need a quantity surveyor for a construction loan?

Accepted Answer

Not for standard residential construction with a registered builder and fixed-price contract — the builder's contract price is accepted by lenders as the basis for the loan. A quantity surveyor report is typically required for larger development projects, owner-builder applications, or unusual construction types where the lender wants independent cost verification. We advise whether a QS report will be required for your specific project at your first call.

Question 26

How is a construction loan different from a renovation loan?

Accepted Answer

A construction loan involves building from the ground up or from slab level — it uses a progress payment structure with builder-certified claims. A renovation loan typically refers to equity release from an existing mortgage to fund works, often using a personal loan or redraw for smaller renovations, or a construction component added to a refinance for substantial structural works. The right product depends on the size, nature, and structural complexity of your renovation. We advise on the best structure at your first call.

Question 27

What is house warranty insurance and do I need it for a construction loan?

Accepted Answer

Home warranty insurance (known in Victoria as domestic building insurance) is mandatory for all domestic building contracts over $16,000 where a builder is licensed and the contract is for new construction or structural renovation. It covers the homeowner if the builder becomes insolvent, disappears, or dies before completing the project. All lenders require proof of this insurance before releasing construction funds. Your builder is responsible for obtaining it — we check it's in place as part of the application process.

Question 28

Can I combine the FHBG and FHOG for a construction loan?

Accepted Answer

Yes — this is one of the most powerful combinations available to first home builders in Victoria in 2026. The FHBG reduces your required deposit to 5% (and eliminates LMI), while the FHOG provides $10,000 cash at the first progress payment stage. On an eligible new build up to $750,000, this combination can reduce your upfront cash requirement by $10,000 and save the LMI cost that would otherwise apply on a sub-20% deposit loan. We structure these combinations routinely for first home buyers building in Melbourne and Geelong.

Question 29

What is a house and land package and how does the financing work?

Accepted Answer

A house and land package combines the purchase of vacant land with a contract to build a new home. The financing occurs in two stages: (1) the land component settles first, with a standard land purchase loan; (2) when construction commences, the construction component draws down progressively as building stages are completed. Some lenders offer a single combined facility; others split the two components. We ensure the structure is efficient and minimises the period you are paying interest on both a land loan and rent or mortgage elsewhere.

Question 30

What are the risks of a construction loan compared to buying established?

Accepted Answer

Construction loans carry different risks from buying established: (1) Builder risk — what happens if your builder fails or can't complete; (2) Cost escalation risk — variations can increase the final cost beyond budget; (3) Valuation risk — the end-value valuation may come in lower than expected, affecting your final LVR; (4) Timeline risk — builds can take longer than planned, extending the interest-only period and delaying your occupation. We explain how to mitigate each of these risks — correct insurance, fixed-price contracts, realistic timelines, and lender selection — at your first call.

Question 31

How does the construction loan end-value valuation work?

Accepted Answer

Before approving a construction loan, the lender commissions a 'as if complete' valuation — an assessment of what the finished property will be worth when the construction is done. This end-value is used to calculate the LVR the lender is lending at. In strong-growth Melbourne suburbs, the end-value often significantly exceeds the total land and construction cost, resulting in a low effective LVR which can improve your loan conditions. In some outer growth areas, end-value may be closer to total build cost — we advise on this dynamic upfront so there are no surprises.

Question 32

What is a building progress payment schedule?

Accepted Answer

Your building contract will include a payment schedule that specifies the amounts owed to your builder at each construction stage (slab, frame, lock-up, fixing, completion). This schedule drives the construction loan drawdown — when your builder reaches a stage and issues a progress claim, your lender (after inspection/certification) releases the corresponding loan amount directly to your builder. You do not handle the funds — they flow directly from lender to builder. We review this schedule at application to ensure it aligns with your lender's policies and your cashflow.

Question 33

I'm building in a new estate — what do I need to know about land titling?

Accepted Answer

In new estates, individual land lots are often sold off a plan before the land is titled — meaning the title doesn't legally exist yet. You enter a land purchase contract and settlement occurs when the land is titled (sometimes 6–24 months later). This timing affects your construction loan — the construction component can't draw down until you have settled the land. Finance pre-approval for the land component can be obtained before title, and we manage the transition from pre-approval to formal approval as titling progresses. We have experience with land titling timelines across Melbourne's major growth estates.

Question 34

Can I build a granny flat using a construction loan?

Accepted Answer

Yes — secondary dwelling or granny flat construction can be financed through a construction loan component added to an equity release or refinance. Lenders assess secondary dwellings based on the overall value of the property after construction. Not all lenders accept secondary dwellings for construction finance, but several on our panel do. The key requirements are council approval, compliance with the Residential Tenancies Act, and a fixed-price contract with a licensed builder. We advise on the right lender and structure for your granny flat project.

Question 35

What is a retaining wall / site costs allowance and how does it affect my loan?

Accepted Answer

Site costs are the costs incurred before the standard building contract begins — items like demolition, site clearing, retaining walls, piering for reactive soils, and connecting services. These costs are often not included in standard house-and-land package base prices and can range from $10,000 to $100,000+ depending on the site. We always ensure site costs are included in the total construction budget presented to lenders — undisclosed site costs create a funding shortfall mid-build, which is one of the most common problems in construction loan management. Your builder's pre-purchase site assessment is essential before committing to any land purchase or construction contract.

Question 36

Can I refinance my construction loan once the build is complete?

Accepted Answer

Yes — once construction is complete, your construction loan converts to a standard home loan. At this point (or within 6–12 months when a 2-year fixed window opens), you can review the market and refinance to a more competitive rate from a different lender. Many clients find their original construction lender's revert rate is not optimal once they are a standard borrower — we proactively flag when to review post-construction, including any break cost consideration on fixed rate arrangements.

Question 37

What is a building contract review and does IFG do one?

Accepted Answer

We review your building contract before any loan application is submitted. We look for items that cause friction with lenders: payment schedule structures that don't align with standard stage payments, non-compliant sunset clauses, missing builder insurance details, or provisional sum items that suggest cost uncertainty. Catching these at the start avoids delays mid-process. We do not provide legal advice on building contracts — for that, a building lawyer is recommended — but we identify the finance-relevant issues that need addressing before your application is lodged.

Question 38

What is involved in financing a knock down rebuild in Melbourne's inner north?

Accepted Answer

Knockdown rebuilds (KDRs) in Coburg, Brunswick, Pascoe Vale, Strathmore, Essendon and similar inner-north suburbs are increasingly attractive because land values in these areas are strong. The financing typically involves: (1) demolition cost (included in the construction loan or funded separately); (2) construction loan drawn in progress payments as the build progresses; (3) end-value valuation of the completed home. Inner-north KDR end-values often substantially exceed the total land and build cost, resulting in excellent effective LVRs at completion. We have direct experience with KDR projects across Melbourne's inner-north and can advise on which builders and lenders work best for these projects.

Question 39

What is progress payment interest and how much does it cost?

Accepted Answer

During construction, you only pay interest on the amounts actually drawn down from the loan as each progress payment is made — not the full approved loan amount. This means your repayments start small and grow as the build progresses and more of the loan is drawn. For example, if your total construction loan is $500,000 but only $100,000 has been drawn after the slab stage, you pay interest on $100,000 only. This interest-only phase typically lasts 6–18 months until completion, when repayments convert to principal and interest on the full balance.

Question 40

Is an architect-designed home harder to finance than a project home?

Accepted Answer

Architect-designed homes can be slightly more complex to finance if they use non-standard materials or construction methods, or if the builder is a boutique firm rather than a large registered building company. Lenders want certainty that the build will complete and that the end-value is supportable. We identify lenders who are comfortable with architect-designed or custom builds and ensure the application documentation addresses any questions about the construction method or builder capacity. Architect-designed homes in good Melbourne locations typically have strong end-values that work in borrowers' favour.

Question 41

When should I get finance pre-approval for a new build?

Accepted Answer

Get finance pre-approval before signing any land contract or building contract. Both contracts create binding legal obligations — if your finance subsequently doesn't work, you can lose your deposit or face legal exposure. Pre-approval gives you confidence in your budget, and knowing your approved loan amount prevents you signing a building contract that exceeds what you can borrow. We provide construction loan pre-approvals that cover both the land and construction components so you enter negotiations with full confidence.

Question 42

How are construction loans assessed for self-employed borrowers?

Accepted Answer

Self-employed borrowers can absolutely access construction loans. Income assessment uses the same methods as standard home loans — typically last 2 years' tax returns and ATO notice of assessments. The construction component adds documentation requirements but doesn't change the income assessment approach. Low-doc construction finance is also available through select lenders on our panel for self-employed borrowers with strong assets and irregular income documentation. We advise on the right lender and documentation approach at your first call.

Question 43

What is a construction loan pre-approval and how long does it last?

Accepted Answer

A construction loan pre-approval confirms that you are eligible to borrow up to a specified amount for a residential construction project, based on your financial position at the time of assessment. Pre-approvals typically last 3–6 months (varying by lender). They give you the confidence to sign land and building contracts within your approved budget. Note that formal approval for the land component requires a signed land contract, and formal approval for the construction component requires a signed building contract with council-approved plans. Pre-approval is the starting point, not the finish line — and we manage the transition to formal approval for you.

Question 44

What is the First Home Guarantee (FHBG) and can it be used for building a new home?

Accepted Answer

Yes — the FHBG allows eligible first home buyers to purchase or build with just a 5% deposit without paying LMI. For new construction, the $750,000 FHOG (new builds) cap and the $950,000 FHBG cap can overlap — you can potentially access both on an eligible new build. The FHBG works for house-and-land packages where the total of land plus construction contract is within the relevant price cap. We check your eligibility for FHBG, FHOG, and any other applicable schemes as a standard part of every first home builder consultation.

Question 45

Can I build on rural or regional land with a standard construction loan?

Accepted Answer

Rural residential blocks (residential zoned, typically within 50km of a serviced town, under 10 acres) can usually be financed on standard construction loan terms. More remote, larger, or commercially zoned rural properties have more limited lender appetite and lower LVR caps. Geelong-area builds on residential land (Armstrong Creek, Lara, Torquay, Ocean Grove, Barwon Heads) are well within standard construction loan parameters. We advise on lender appetite for your specific land location upfront so there are no surprises.

Question 46

What is a land-only loan and how does it transition to a construction loan?

Accepted Answer

A land-only loan is used to purchase a block before you are ready to build. It is an interest-only or principal-and-interest loan secured by the land, with no construction component yet. When you are ready to build, you apply for a construction loan — either with the same lender as a new facility, or by refinancing to a construction product. The transition from land-only to construction loan is something we plan for at the outset — ensuring your land loan is structured to make the transition straightforward and that you're not locked into a product that doesn't convert efficiently.

Question 47

What is involved in financing a dual occupancy or duplex build?

Accepted Answer

Dual occupancy and duplex builds require development-style finance assessment rather than standard construction loans. Lenders assess feasibility based on end values for both dwellings, equity in the land, council approval, and the builder's track record. Some lenders require presales of one dwelling before approving full construction funding. LVR caps are typically lower — 65–75% — and the application is more complex than a single-dwelling construction loan. We have lenders on our panel for dual-occupancy projects of all scales and guide clients through the full funding structure.

Question 48

Can I include a pool or landscaping in my construction loan?

Accepted Answer

Most lenders include pools in construction loan financing if they are part of the original building contract — the pool builder's contract is included in the total cost. Landscaping is more variable — hard landscaping (retaining walls, sealed driveways) is generally included; soft landscaping (grass, gardens) is often excluded or limited. We advise on what your chosen lender will and won't include in the construction facility so your total budget is correctly structured from the start.

Question 49

Can I build a second house on my investment property using a construction loan?

Accepted Answer

Yes — if you own investment land or an investment property with a rear block that can be subdivided or has dual occupancy potential, you can use a construction loan to fund the new dwelling. The assessment is based on your combined equity, the end-value of the new dwelling, and your overall borrowing capacity. Some investors build a new dwelling at the rear of an existing investment property to improve rental yield while the existing tenanted property continues generating income during construction. We assess the viability and funding structure for these dual-income investment builds regularly.

Question 50

What insurance do I need during a construction loan?

Accepted Answer

During construction you need: (1) Builder's home warranty insurance — mandatory in Victoria for contracts over $16,000; (2) Construction contract works insurance — typically provided by your builder, covers incomplete structure; (3) Home contents insurance — not required during construction but arrange for occupation; (4) Landlord insurance if this is an investment build. You will also need to obtain building insurance before the first drawdown on some lenders. We provide a full insurance checklist for your construction project as part of the pre-approval process.

Question 51

How does the final inspection and valuation work at the end of construction?

Accepted Answer

At practical completion — when your builder has completed all contracted works — you will receive an occupancy permit (issued by the building surveyor) and a practical completion certificate from the builder. The lender will arrange a final inspection and valuation to confirm the property has been completed as described in the plans and contract. The final progress payment is released on this basis. We coordinate with the builder, the lender's valuer, and your solicitor to ensure the final payment and loan conversion happen cleanly and on schedule.

Question 52

What is the process for drawing down construction loan funds in Victoria?

Accepted Answer

The drawdown process in Victoria: (1) your builder reaches a construction milestone; (2) your builder issues a progress payment claim with a statutory declaration confirming the stage is complete; (3) the lender may order a progress inspection or request photos; (4) upon satisfaction, the lender transfers the progress payment directly to your builder's nominated account; (5) you are notified of the drawdown and your updated loan balance. This process repeats at each stage. We prepare you and your builder for this sequence at the start of the loan so there are no payment delays.

Question 53

What happens if my builder charges more than the contract price?

Accepted Answer

Under a fixed-price contract, your builder is contractually obligated to complete for the agreed amount. Legitimate additional costs only arise through agreed variations (changes you request) or specific provisional sum items (where an estimate was used rather than a fixed price). If a builder attempts to charge above the fixed contract price for non-varied work, this is a contractual dispute — Consumer Affairs Victoria and the Victorian Building Authority are the relevant bodies. We flag provisional sum items at the application stage so you know where cost uncertainty may exist and can budget accordingly.

Question 54

Can I choose my own builder for a house and land package?

Accepted Answer

In most house-and-land packages through estate developers, there is a nominated builder or a panel of builders tied to the estate. You typically have some choice of builder within that panel, and some choice of design and specification. If you want complete freedom to choose your own builder, buying land separately from an open-market block and tendering your own building contract gives full builder choice. We work with both scenarios — estate house-and-land and independent builder arrangements — and the loan structure is similar for both approaches.

Question 55

What is a progress payment claim and how does my builder submit one?

Accepted Answer

A progress payment claim is a formal request from your builder for the amount owed at a particular construction milestone. Under the Building and Construction Industry Security of Payment Act 2002 (VIC), progress claims have specific statutory timing and response obligations. In practice, your builder submits a progress claim — often including photos of the completed stage and sometimes a statutory declaration — to your broker and/or lender. We manage the progress claim process throughout your build, ensuring each claim is correctly documented and the lender releases funds without unnecessary delay.

Question 56

Can I convert my construction loan to a fixed rate after completion?

Accepted Answer

Yes — once construction is complete and your loan converts to a standard home loan, you can fix all or part of your rate. Many borrowers take the opportunity at completion to review fixed versus variable options given where rates are at that point. There is sometimes a brief window (often 60–90 days) immediately post-completion during which lenders allow a rate lock without additional assessment. We advise on the timing and rate environment for this decision as your completion date approaches.

Question 57

What is a construction loan comparison rate and why is it different from the interest rate?

Accepted Answer

The comparison rate is a standardised rate that includes fees and charges in addition to the interest rate, expressed as a single percentage. For construction loans, comparison rates can be misleading because they include ongoing fees over a full 25-year term, while a construction loan's fee structure differs significantly between the build phase and the post-construction phase. We explain the full cost structure of any construction loan we recommend — not just the headline rate or the comparison rate — so you understand what you are actually paying throughout the build and beyond.

Question 58

Can I switch my construction loan to a different lender during the build?

Accepted Answer

Technically possible but rarely advisable once construction has commenced. Switching lenders mid-build introduces risk of payment disruption to your builder, potential for timing conflicts between the two lenders, and legal and administrative complexity. The time to ensure you are with the right lender is before construction starts — which is exactly why thorough lender selection at the application stage is critical. We select construction lenders not just on rate, but on their progress payment process, construction team quality, and ability to support your build from start to finish.

Question 59

How do I find a reputable builder in Melbourne for a KDR or new build?

Accepted Answer

Finding the right builder for your project is outside our formal scope as finance brokers — but we work with Melbourne clients at every stage and can share which builders our clients have had positive experiences with for KDR projects in Melbourne's inner-north and north-west, and for house-and-land packages in growth corridor estates. Key checks: builder's licence status (Victorian Building Authority register), HBCF (home warranty insurance) eligibility, past project reviews, and financial stability. A fixed-price contract from a licensed and insured builder is non-negotiable for construction finance.

Question 60

I am thinking about a modular or prefab home — can I get a construction loan?

Accepted Answer

Modular and prefabricated homes can be financed through construction loans, but lender appetite is more selective than for standard site-built homes. Key considerations: the modular builder must be a licensed builder; the home must be permanently fixed to the site; the contract must be a fixed-price domestic building contract; and the end-value must be supportable by a valuation. Some lenders restrict modular builds by postcode or require higher deposits. We identify lenders on our panel with appetite for modular construction and advise on the documentation requirements upfront.

Question 61

What is the fastest way to get a construction loan approved in Melbourne?

Accepted Answer

The fastest path to construction loan approval: (1) get a pre-approval before you sign any contract; (2) have your income documentation clean and ready (payslips or 2 years' tax returns); (3) ensure your building contract is fixed-price and your builder is licensed and insured; (4) have council-approved plans ready at application; (5) use a broker who knows which lenders have the fastest construction assessment teams and the right appetite for your project type. We target 7–10 business days for straightforward construction loan formal approvals from full application — and we tell you upfront if there are factors that will extend that timeline.

Question 62

What is IFG's experience with construction loans in Melbourne and Geelong?

Accepted Answer

Integrated Finance Group has extensive experience placing construction loans across Melbourne's inner-north (Coburg, Brunswick, Pascoe Vale, Strathmore, Essendon, Keilor East), the north-west growth corridor, and Greater Geelong including Armstrong Creek, Lara, Torquay, and Ocean Grove. We understand the end-value dynamics in each area, the common builder panel used in each estate, and the lender construction teams that process quickly and support smooth progress payment management. Our construction loan clients can call or email us at any point during their build for guidance on progress claims, variations, or any issue that arises — our service doesn't stop at approval.

Question 63

Should I get a building inspector separate from the lender's inspector?

Accepted Answer

Yes — the lender's progress inspections confirm that the contracted stage is substantially complete so payment can be released. They do not check workmanship quality, code compliance, or building standards on your behalf. An independent building inspector engaged directly by you provides a quality assurance check at each stage — checking for defects, non-compliance with plans, and workmanship standards. This costs $200–$500 per inspection but can identify issues while they are still easily corrected during construction. We recommend independent inspections at every progress stage as a standard practice for construction loan clients.

Question 64

What is the typical build time for a house in Melbourne in 2026?

Accepted Answer

Build times in Melbourne in 2026 vary by project type and builder. Standard project home builds in growth corridor estates typically take 9–16 months from slab down to practical completion. KDR and architect-designed builds in established suburbs typically take 10–18 months. Complex multi-level or custom builds can take 18–24 months. Material supply chain conditions, council approval timelines, and individual builder workload all affect actual build times. We factor realistic timelines into your construction loan facility, including buffer time for common delays, to avoid unnecessary facility extensions.

Stage	Milestone	Typical % of Loan
1	Base / Slab Completion	10–15%
2	Frame Completion	15–20%
3	Lock-Up (walls, roof, external doors)	20–25%
4	Fixing / Fit-Out (internal fit, kitchens, bathrooms)	20–25%
5	Practical Completion	Remaining balance

★ Construction Loans Melbourne 2026

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🏗 Knockdown Rebuilds in Melbourne's Inner-North — Why They Work

Frequently Asked Questions — Construction Loans Melbourne 2026

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