How does finance work when building a new home

Financing a new build involves a construction loan, which differs from a standard mortgage. Funds are released in stages (progressive drawdowns) to pay builders as work progresses, and you can often make interest-only repayments during construction.

To manage potential cost overruns, it's vital to have a contingency fund of at least 15%. Be prepared for project delays and have a lawyer review your building contract before you begin. Choosing an experienced, registered master builder is also essential.