How many drawdown stages are there in a typical build?

Most fixed-price contracts use five stages: slab, frame, lock-up, fixing, and completion. Each stage triggers a claim from the builder and a corresponding drawdown once the lender's valuer confirms the work is done.

Do I pay interest on the full loan from day one?

No. Interest is charged only on the portion drawn down at each stage, which is one reason construction loans can be cheaper in the early months than a fully drawn mortgage of the same size.

Is an owner-builder loan harder to get through a broker?

Generally yes. Fewer lenders accept owner-builder applications and those that do often ask for more detail on your own trade experience or require a higher deposit.

Construction loan progress payment drawdowns explained

A construction loan is not drawn down in one lump sum. It is released in stages tied to the build: slab, frame, lock-up, fixing, and completion, with the lender's valuer checking progress before each payment goes to the builder. This staged structure is different enough from a standard home loan that it needs a broker who understands how lenders assess these drawdowns, and what documents a builder needs to submit at each stage to avoid a hold-up on site.

This is particularly relevant if you are building with a fixed-price contract versus acting as an owner-builder, since lenders treat the two very differently in terms of documentation and risk loading. A broker working this space should be able to explain what a lender needs at each progress claim, and how interest is charged only on the amount drawn so far rather than the full approved limit.

Standard fixed-price building contract drawdowns
Owner-builder progress payment structures
Valuer inspections required between stages
Interest calculated on funds drawn, not full loan amount

What it costs

Lenders typically charge a progress inspection or valuation fee at each drawdown stage, on top of standard construction loan setup costs. Owner-builder loans often carry higher rates or extra conditions because the lender is taking on more risk without a licensed builder's warranty behind the job.

Top 3 by our score

Ranked from our published scoring of public Google reviews for construction & building loans.

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FAQ

How many drawdown stages are there in a typical build?: Most fixed-price contracts use five stages: slab, frame, lock-up, fixing, and completion. Each stage triggers a claim from the builder and a corresponding drawdown once the lender's valuer confirms the work is done.
Do I pay interest on the full loan from day one?: No. Interest is charged only on the portion drawn down at each stage, which is one reason construction loans can be cheaper in the early months than a fully drawn mortgage of the same size.
Is an owner-builder loan harder to get through a broker?: Generally yes. Fewer lenders accept owner-builder applications and those that do often ask for more detail on your own trade experience or require a higher deposit.

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