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Fixed Rate Construction Loans

Every lender in Australia offers fixed rate loans, however only a few will allow you to have the security of a rate that has been locked in while you are building your home.

This is because fixed rate loans are more complex for banks to fund, so they don’t allow you to draw down the loan in progress payments. Luckily, there are some lenders that have different sources of funding for their loans.

What features are available?

Construction loans with a fixed rate can still come with some of the benefits of traditional fixed rate loans.

  • Rate lock: Lock in your rate at the time of application to protect yourself from rate movements before council approves your plans and construction commences.
  • Progress payments: The loan can be drawn down in stages to match the required payments to your builder.
  • Progress inspections: Some lenders will send a valuer to assess the building during construction before releasing progress payments.
  • Fixed terms: 3 or 5 year fixed rate terms are available. Longer terms may be available on a case by case basis.
  • Interest only: Repayments can be minimised during construction and converted to principal and interest repayments for the remainder of the loan term.

In all cases, you must be using a licensed builder, your building must be approved by council and the lender must obtain a satisfactory on completion valuation.

Give us a call on 1300 889 743 or enquire online and one of our mortgage brokers will let you know which banks can help.

How much can you borrow?

First home buyer / Home loans: 95% of the land value plus the cost of construction.

Investor / Investment loans: 95% of the land value plus the cost of construction.

Renovation loans: 95% of the current house value plus demolition costs plus the cost of construction.

Discounts: Competitive professional package and basic loan discounts are available.

What if my bank doesn't allow fixed building loans?

You can choose to build using a variable rate loan and then when construction is complete you can lodge a variation request to fix your interest rate.

The problem with this approach is that if interest rates change while you are building then you will need to accept the new rate.

The other option is to apply with another bank that does allow you to fix the rate during construction.

Talk to a construction loan specialist

Please call us on 1300 889 743 or enquire online to talk to a specialist mortgage broker who knows which lenders offer construction loans with fixed rates and to discuss which fixed term is more appropriate for you.