A practical construction finance checklist covering contracts, valuations, contingencies, approvals and lender milestones.
Review the contract alongside the finance
Building a new home involves two major commitments: the construction contract and the mortgage. A construction loan broker can explain what a lender is likely to require, while a qualified legal professional should review the building contract itself.
Check that plans, specifications, allowances, variations procedures and the payment schedule are clearly documented. Assumptions that are not in the signed documents may be difficult to resolve later.
Check the full project cost
The quoted construction price may not cover every cost. Consider site preparation, soil conditions, utility connections, driveways, landscaping, permits, finishes and temporary living expenses.
Use a detailed budget rather than a single headline figure. Identify which costs are fixed, provisional or subject to variation and keep a contingency for unexpected expenses.
Understand valuation risk
A lender may value the property on an as-if-complete basis using the approved plans and contract. That valuation can differ from the combined land and construction costs.
If the valuation is below expectations, your contribution or loan structure may need to change. Understand this before making commitments that depend on a particular amount of finance.
Clarify progress claims and inspections
Know which stage triggers each builder invoice, what documentation is required and how long the lender's drawdown process can take. Ask about inspections, the final release of funds and any borrower contribution expected before lender funds are advanced.
Keep copies of variations, invoices, approvals and correspondence as the project progresses.
Plan for delay scenarios
Construction can be disrupted by weather, materials, labour or approval changes. Consider how longer build times affect rent, existing mortgage repayments and the availability of loan funds.
A good pre-build review weighs your cash flow against the full project timeline, not just the expected construction period.
Useful resources
For general consumer guidance, see ASIC Moneysmart. For tailored home loan assistance, speak with Fulton Financial.
General information only. Loan suitability, features, fees and eligibility depend on your circumstances and lender requirements. Consider obtaining independent legal, tax or financial advice where appropriate.
