Excited to build your dream house or renovate your existing one, but overwhelmed by the thought of the costs and complexities involved? 

If your answer is yes, you’ve come to the right place. 

It’s one of the biggest decisions we can make, so to help make the process a little less stressful, we’ve put together a guide of a few things to consider before embarking on a build. 

That way, you can spend less time researching how to finance your project and more time choosing the perfect doorknobs.


How much does it cost to build a house?

Hipages estimates that the average cost to build a house in 2022 is between $1,300 - $3,900 per square meter, depending on several factors.

Let’s break some of these factors down for you.

How to finance building a house

For some, funding a building project can be done without the help of financing. For the majority, construction (or building) loans may be the answer to getting your dream home or renovation off the ground and on the slab sooner. 


What is a construction loan?

A construction loan is essentially a home or investment loan that, for the duration of your construction period, is paid to you in instalments rather than in a lump sum. At the end of your construction period, your construction loan will continue as your chosen home loan. With People’s Choice, you can choose from a variable package, a one-year or two-year fixed package, a standard variable or a basic variable loan.

You can also choose additional features, such as opting to have a split loan. Or, you could select a 12-month interest only repayment option during the construction period, which means reduced repayments and more cash in your pockets for when you may need it.


How does a construction loan work?

A construction loan allows you to draw down on your home or investment loan in instalments over the course of your construction. The timing of these instalments generally lines up with the six stages of building a house, so that you can provide payment to your builders prior to commencement of each stage.

The standard stages of construction are: 

  1. Preparation – plans, permits, fees, insurance, etc.
  2. Foundation – levelling the land, laying the slab, excavations, plumbing, etc. 
  3. Framing – constructing walls, roof trusses, windows, door frames, etc.
  4. Lock-up – adding everything you need to turn your building into a house and locking it up.
  5. Fix-up – plastering, sealing, adding your appliances, bathroom installed, etc.
  6. Completion – site tidied, fences up, and builders receive final payment.


How to qualify for a construction loan

Your lender will want confidence that you can comfortably make your construction loan repayments. To show that your loan is affordable, you may want to have the following records handy:

  • Your income details and employment history – including pay slips, child support, pensions, overtime, allowances, rental income, and commissions. Your lender might also check how long you’ve been employed in your current contract or industry for.
  • Your savings history – it helps to show your lender proof that you can save, like having a good account history.
  • Expense details – including utility bills, rent, board, loan repayments, credit and store cards, maintenance, and lease payments.
  • Asset information including cash savings, value of motor vehicles, shares, bonds, property, and furnishings.
  • Residential and employment details for the last three years.
  • Australian driver’s licence number and expiry.

Read more about what to know before you apply for a home loan here.

How to apply for a construction loan?

Ready to apply? First, you may want to check how much you can borrow with our home loan calculator and borrowing power calculator. You can also calculate your additional costs with our stamp duty and land tax calculator.

To take the first step toward applying, submit our online application form here

Alternatively, you can speak to one of our team members by calling 13 11 82 or visiting your nearest branch

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