Construction Finance
Last reviewed 13 June 2026 by Nick Lim, finance broker (FBAA).
Construction Finance is a loan that funds the building of a property in stages, releasing money against progress claims as each stage is completed rather than in one lump sum. Interest is usually charged only on the drawn balance during the build, with the final drawdown released on the completion certificate. It is the build component that often sits inside broader development finance, and it runs on staged drawdowns tied to a fixed price building contract.
Why Construction Finance Matters
Construction finance matches funding to the build, so you only pay interest on what has actually been drawn.
- Released in stages against a progress claim
- Interest charged only on the drawn balance
- Runs on staged drawdowns
- Tied to a fixed price building contract
- Often the build leg of development finance
Common Features of Construction Finance
- Funds released stage by stage
- Drawdowns against verified progress claims
- Interest only on drawn funds during the build
- Final drawdown on completion certificate
- Converts to a term loan or is repaid on sale
Official reference: moneysmart.gov.au
What is construction finance?
A loan that funds a build in stages, releasing money against each progress claim rather than all up front.
How is interest charged during construction?
Usually only on the balance drawn so far, so payments rise as the build progresses.
When is the final payment released?
On the completion certificate or occupancy certificate, after the last progress claim.
Construction finance vs development finance?
Construction finance is the build leg; development finance also covers land and the wider project.
What triggers each drawdown?
An approved progress claim, usually verified before the staged drawdown is released.