Benefits of a Westpac construction loan

What is a construction loan?

A construction loan (also known as a building loan) can help fund a new build, house and land package, renovation or home improvement project. Funds are released in stages as construction progresses, so you can pay for work as it's completed.

Learn more about construction loans and how they work.

How do construction loans work?

How do I manage my construction loan progress payments?

From approval to final completion, this step-by-step guide provides key information on each stage of construction; helping you understand the process, manage progress payments and navigate your build with confidence.

Note: These five stages of Fund allocation are indicative only and down payments for construction loans typically range from 10% to 25% of the total cost. Your building contract and payment schedule (where required) apply. The below stages can vary in both numbers and activities, so are for guidance, only.

In short, progress payments work in the following way:

1. Builder completes a stage.
2. You check the work.
3. You approve the claim.
   • Important: Only approve a progress payment once you're satisfied the work has been completed as agreed. Raise any defects or concerns with your builder before payment is released.
4. Westpac reviews your request.
5. Westpac pays the approved amount into your account to pay the builder.
   • Important: It is your responsibility to ensure your builder is paid in accordance with the terms of your building contract.
6. New stage commences.

We recommend:

• Check the stage is complete and meets your contract terms.

• Resolve any concerns directly with your builder.

• Check the invoice matches your approved payment schedule.

  • Important: any payment amounts which differ from the original payment schedule on contract may result in processing delays.
  • Owner-builder or cost plus contracts may not require a payment schedule.

• Confirm any required customer contribution has been paid.

• Have details of any approved variations ready.

• Submit the claim only when you are comfortable approving payment.

Before the final payment is released, you'll need to provide updated building insurance and a satisfactory valuation confirming the build is complete.

See ‘How do I manage my construction loan progress payments?’ for more detail on what’s required when submitting a progress payment.

Yes. If you're buying a house and land package, your construction loan can be used to purchase the land first. Once construction begins, the remaining funds are released in stages as your build progresses.

If you're only buying land and not ready to build yet, you can apply for a standard Westpac home loan instead of a construction loan.

Already have a land loan with another lender? You may be able to refinance it to Westpac. Speak to us to explore your options.

Depending on your circumstances, you may be eligible for government grants, schemes, concessions or Westpac home loan benefits that could help reduce upfront costs, support your deposit, or improve your borrowing power.

Some options that may be available include:

• First Home Owner Grant (FHOG): If you're buying or building your first home, you may be eligible for a one-off government grant. Grant amounts, property value caps and eligibility requirements vary by state and territory.
  • If you're eligible for this grant, the payment will be released once “Stage 1 Slab” is completed. Note, you cannot use the FHOG to pay the initial holding deposit.
• Australian Government 5% Deposit Scheme: Eligible first home buyers may be able to buy or build a home with as little as a 5% deposit without paying Lenders Mortgage Insurance (LMI). Eligible single parents or legal guardians may be able to purchase with a 2% deposit. Property types can include vacant land with a contract to build, house and land packages, off-the-plan properties and newly built homes.
• Professional Home Loans: Eligible healthcare and medical professionals may be able to access benefits such as LMI waivers^[#], helping them borrow with a lower deposit. Eligible medical professionals and essential trade workers may also have 100% of eligible non-base income, such as allowances and overtime, considered when assessing borrowing capacity. These benefits may be available with a construction loan, subject to eligibility and lending criteria.

Eligibility requirements can change over time, so it's important to check the latest details before relying on a grant, scheme, concession or other support as part of your budget.

Book an appointment with one of our home lending specialists to understand which options may be available to you.

• Fixed price contracts provide greater certainty by setting the construction cost upfront and have a schedule of payments. May be better suited for tight budgets.
• Cost plus contracts charge the actual cost of the build plus a builder's fee, which can offer flexibility but may result in higher costs if expenses increase.

• Structural renovations involve major changes to your home, such as removing walls, adding an extension or building another level.
• Non-structural renovations are cosmetic updates, such as painting or installing new flooring.

If a Quantity Surveyor (QS) report is required, you'll need to arrange and provide the report before funds can be released. The QS may also need to inspect the property at key stages of construction and confirm the work has been completed as planned before further progress payments can be made.

Any reports or additional information requested will need to be provided by you, and you'll be responsible for any associated costs. The report must be prepared and signed by a member or fellow of the Australian Institute of Quantity Surveyors (AIQS).

Award-winning value

Backed by Canstar’s 2026 Outstanding Value – Investment Variable Home Lender Award^[#], helping you feel confident in your next investment.

Book appointment