Construction Loan Calculator.

How a construction loan works

Unlike a standard home loan, a construction loan is drawn down in stages as your builder completes each phase of work. You only pay interest on the amount drawn so far, so your repayments start small and grow with each progress payment.

Once the build is finished and the full loan has been drawn, it typically converts to a normal principal-and-interest loan over the remaining term.

Assumptions

• Loan required is the building contract price less your owner contribution. Land already owned or held as equity is not modelled separately.
• Pre-construction / approval covers the wait from land settlement to on-site work — plans, permits and the builder's deposit. Each stage's progress payment is a share of the total build contract.
• Your owner contribution is spent first. Progress payments draw down your contribution before the loan, so the loan — and interest — only begins once your contribution is exhausted. The early stages often carry no interest at all.
• Interest is estimated on the cumulative loan balance drawn up to and including each stage, for that stage's duration. The exact timing of each progress payment, and how your lender charges or capitalises interest, will vary.
• Progress-payment percentages and durations are editable defaults; your builder's fixed-price contract will specify the actual schedule.
• Interest-only figure shown is the monthly interest once the loan is fully drawn (the peak construction repayment).
• Repayment after completion assumes principal-and-interest at the same rate over the term selected. Construction and ongoing rates, fees, LMI and offset accounts are not included.