Construction

Construction loans: stages, progress payments and preparation

Understand how construction loan stages, progress payments, valuations, borrower contributions, variations and completion checks fit together.

Updated: 29 July 2026
Read time: 7 min read
Reviewed by: emoney broker team

Key checks before you decide

Reviewed by emoney broker team. Updated 29 July 2026. Sources are listed below.

Check the building contract and payment schedule against the lender's approved drawdown process.
Prepare one budget covering deposits, borrower contributions, excluded works, variations and contingency funds before building starts.
Check each claim against completed work and keep invoices, inspections, approvals, and payment records.
Confirm completion documents, insurance, final inspection, defects steps, and the post-build repayment.

In this guide6 sections

Understand staged lending Prepare the land and building documents Match the contract schedule with the lender process Allow for valuations and borrower contributions Control variations before signing them Check every progress claim and completion step

Understand staged lending

A construction loan usually does not release the full building amount at once. Funds are commonly drawn as completed work reaches agreed stages.

The contract may describe stages such as deposit, slab or base, frame, lock-up, fixing, and completion. The lender's labels, evidence requirements, and payment process can differ, so the borrower and builder should not assume the contract schedule automatically matches the lender schedule.

Interest is commonly calculated on the amount drawn rather than the full approved construction limit during the build, but the exact repayment arrangement must be checked with the lender.

Ask who submits each claim, who authorises payment, whether the lender arranges an inspection and how long a drawdown usually takes. That timing should be clear to the builder before invoices fall due.

Confirm the lender's progress-payment stages.
Check how invoices and inspections are submitted.
Understand repayments during construction and after completion.

Prepare the land and building documents

The first review should show what is being built, where it is being built, who will build it, how much it costs, and what approvals are in place.

Common starting documents include the land contract or title details, fixed-price building contract, plans, specifications, inclusions, council or certifier approvals, builder details, insurance evidence, and quotes for work outside the main contract.

The broker can confirm the lender-specific list before anything is lodged. Send sensitive personal records and signed contracts only through the approved secure process.

Building-contract and progress-payment rules vary by state and contract. Obtain the legal or building advice needed for the contract itself; a broker's role is to connect the finance application and lender process with the documents provided.

Land ownership, purchase, title, or settlement details.
Signed building contract, plans, specifications, and inclusions.
Approvals, builder details, insurance, and expected start date.
Quotes for landscaping, driveways, demolition, site works, or other excluded costs.

Watch out

Match the contract schedule with the lender process

The builder's payment schedule and the lender's drawdown process need to work together. A mismatch can create an invoice the borrower is expected to pay before the lender is ready to release funds.

Compare the stage names, percentages and due dates in the building contract with the lender's approved stages. Clarify how deposits already paid and the borrower's required contribution will be treated before the first lender draw.

If work outside the main contract is being funded separately, keep it visible in the same budget. Landscaping, demolition, driveways, retaining walls, utility connections, floor coverings and site costs can create a funding gap when they are treated as afterthoughts.

Where the contract allows a claim that does not align with completed work or the lender's process, seek appropriate contract advice before signing or authorising payment.

Compare the contract stages with the lender's drawdown stages.
Confirm when the borrower's own funds must be used.
Allow for inspection and processing time before invoices are due.
Keep excluded works and separate contracts in the full build budget.

Watch out

Allow for valuations and borrower contributions

A lender valuation may consider the land and the completed property. If the assessed value or eligible construction cost is lower than expected, the borrower may need additional funds.

The amount the lender is prepared to advance can depend on the contract, valuation, loan-to-value ratio, borrower position, and lender policy. Deposits already paid and available cash should be mapped against the lender's required contribution and the timing of early invoices.

Do not spend the contingency buffer merely because the loan is approved. Funding gaps often appear through site costs, variations, exclusions, delayed sales, rent during construction, or changes to the build.

The valuation may not match the total amount the borrower plans to spend. Check how a lower completed value would affect the required contribution before committing every available dollar to the contract deposit.

Check which costs the lender treats as part of the build.
Confirm when personal funds must be contributed.
Keep a separate buffer for variations, delays, and excluded work.

Next step

Want a broker to check this against your situation?

Share the loan goal, timing and a few key details. An emoney broker can then pick up the enquiry with the relevant context.Ask an emoney broker to review the build, budget, timing, and likely document requirements.

Broker note

Control variations before signing them

A contract variation can change the build price without automatically increasing the approved loan amount.

Before accepting a significant variation, check how it will be funded and whether the lender or valuer needs updated documents. Repeated small changes can also exhaust the buffer even when each one appears manageable.

Keep a current build budget showing the contract price, approved variations, work outside the contract, payments made, funds remaining, and contingency balance.

A verbal agreement with the builder is not a funding plan. Record the price, scope, approval and payment timing for each variation, then confirm whether it changes the finance documents.

Price the variation and funding source before signing.
Keep one current budget rather than separate informal totals.
Tell the broker early if timing, builder, scope, or costs change.

Check every progress claim and completion step

Progress payments should match completed work and the approved process. Completion also requires more than the final builder invoice.

The lender may require an inspection, invoice, borrower authority, and confirmation that earlier contributions have been used. The borrower should understand the claim before authorising payment and raise disputed work through the appropriate contract process.

Before the final draw, confirm practical completion, required certificates, insurance, defects process, final valuation or inspection, remaining personal funds, and the repayment arrangement after the loan converts from construction.

Keep the signed contract, approved variations, claims, inspection records, payment confirmations and completion documents together. They provide a clear record if the lender, builder, certifier or insurer needs to trace a stage later.

Match the invoice to the completed stage.
Keep copies of claims, approvals, inspections, and payments.
Confirm completion documents and the post-construction repayment.

Calculator next step

Borrowing power calculator

Estimate a practical borrowing range before narrowing a property search or pre-approval conversation.

Best for: Early budget setting before a buyer gets attached to a price range.
What it calculates: A rough borrowing range from income, expenses, debts, dependants, loan purpose, term, and rate assumptions.

A broker still needs to test income treatment, credit limits, deposit, property type, documents, and lender policy.

Open Borrowing power

Sources used

ASIC MoneySmart home loans
ASIC MoneySmartofficial sourceChecked 29 July 2026
ASIC MoneySmart buying a house
ASIC MoneySmartofficial sourceChecked 29 July 2026
NSW Government building contracts guidance
NSW Governmentofficial sourceChecked 29 July 2026
NSW Planning Portal build stages and progress payments
NSW Governmentofficial sourceChecked 29 July 2026
ASIC responsible lending obligations
ASICofficial sourceChecked 29 July 2026

General information only

This guide is general information and does not take into account your objectives, financial situation, or needs. A broker can review your circumstances before any recommendation.

Next step

Want a broker to check what applies to you?

Share the goal, timing and current loan context in Quick Check so the broker knows what needs reviewing.

Ask an emoney broker to review the build, budget, timing, and likely document requirements.View related service