Building new or knocking down to rebuild: the loan is drawn in stages against the builder's fixed-price contract, interest-only during construction — we align the contract, council permit and draw timeline.

No — it doesn't pay out in one lump sum, and that's the biggest difference from a normal home loan. The money follows the builder's fixed-price contract in progress payments, usually five stages: slab, frame, lock-up, fixing and completion. After each stage the builder issues an invoice, the lender sends a valuer to verify progress, and only on confirmation is the next draw released — paid directly to the builder, not through you. During construction you pay interest only on what's been drawn — if stage one released 20%, you pay interest on that 20%, so repayments look low. Once the home is fully complete and the loan converts to principal-and-interest (P&I), repayments step up to the full level. Construction loans carry heavier approval and documentation than a normal loan, and each stage's paperwork must be ready ahead — otherwise a stalled draw means the builder isn't paid and stops work. We watch this progress-draw rhythm for you.

Honestly, it's hard. Most lenders decline owner-builder outright, for a real reason: without a licensed builder's fixed-price contract, the lender can't control cost-overrun and delay risk — too high for them. A few lenders accept owner-builder, but on much tougher terms — a very low LVR (possibly only 60% or less, meaning a 40%-plus deposit), proof of owner-builder qualification and construction experience, extra owner-builder insurance, and a more conservative valuation. So the builder's profit you save can easily be wiped out by the higher deposit requirement and dearer rate. My advice: before you demolish or buy the land, let us confirm whether any lender will actually take your owner-builder project and how much they'll lend, work that out, and then decide whether to go owner-builder — don't start work only to find you can't borrow.

It steps up noticeably — you must plan cash flow for this ahead of time. During construction you pay interest only on what's been drawn, and since the loan releases in stages, only a small part is out early, so interest is low and repayments feel light. But that's temporary: once the home is fully complete, all five stages are drawn, and the loan converts to principal-and-interest (P&I), you start repaying principal plus interest on the full loan — repayments jump from 'interest on part of the principal' to 'full P&I', and the rise can be large. A concrete example: late in the build you might pay only one or two thousand a month in interest, then three or four thousand in P&I after completion — if you haven't budgeted for that gap, the completion month is tough. So when we plan your cash flow, we always assess your servicing against the post-completion full P&I repayment, not the low construction-phase number, to make sure you can carry it after completion.

A knock-down rebuild runs on a construction loan, and for the self-employed it usually pairs with an alt-doc path. The documents fall into two parts. The build: a fixed-price building contract (including demolition cost), council planning permit, licensed-and-insured builder details, plus building plans and specifications — the lender uses these for the as-if-complete valuation. Your income: self-employed goes alt-doc, typically needing 6+ months' bank statements, ABN ≥ 2 years and an accountant-signed declaration, with BAS-only or full-doc 2-year returns used in some cases. One special point for knock-down rebuild: while the old house is being demolished there's no completed structure on the land to value, and lenders treat the demolition-stage draw and valuation differently — some release a draw against land value first, others wait until the slab stage. We package your build timeline together with your income documentation and find the lenders that take both construction loans and self-employed alt-doc, and handle the knock-down demolition stage well.

Yes — these are two very real construction-loan risks. Cost overrun first: your loan is sized against the fixed-price contract, so if a major variation occurs mid-build and actual cost exceeds the contract, the lender won't necessarily fund the excess — variations within 5% usually pass without review, but beyond 5% triggers a fresh servicing assessment and valuation, and the excess may have to come out of your own cash. Delays next: most lenders allow a 12–18 month construction window, and an overrun requires an extension application, which usually triggers a servicing reassessment — if rates have risen or your income has changed in between, your capacity after re-assessment can actually drop and even affect later draws. So two pieces of advice: build a buffer into your construction budget rather than sizing the loan to the exact dollar; and flag any major variation or possible delay to us early, so we can liaise with the lender and avoid triggering unnecessary re-assessment where possible.