No Deposit Construction Loan

Do I need any savings to buy a house and land package?

Most house and land packages can be financed up to 95% of the total cost of the land plus the builder’s costs for construction.

You can borrow up to 100% with a guarantor.

No deposit house and land packages are a simplified option if you don’t want to go through the hassle of organising a builder, house plans and council approval.

Be careful as some packages are overpriced and others offer cash backs that appear to be a discount but are actually just marketing hype.

Are there 100% land loans?

No deposit land loans are available on the condition that you’re building on the vacant land within one or two years.

In some cases, we can negotiate with the lender to waive the requirement to build.

Land loans are very location dependent.

If you’re not buying in a capital city or regional centre please call us on 1300 889 743 or complete our free assessment form to find out if your location is accepted to the bank.

Are no deposit loans available for renovations?

You can borrow 95% of the cost of the renovation or addition to an existing house.

The amount you can borrow will depend on when you’re renovating:

• You already own the house: If you intend to knock down and rebuild or carry out major renovations, you can borrow up to 95% of the current house and renovations.
• You’re buying a house: If you’re buying a home and have a building contract to start renovations, then this is favourable by lenders. You could borrow up to 100% of the house with a guarantor plus the building contract price.

Having a licenced builder to help with your renovations is more favourable to lenders than owner-builder.

Getting Approved For A Construction Loan in Australia

A full construction loan guide with common mistakes and how they can be avoided.

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Can I build houses or townhouses with no deposit?

Small developments of up to two dwellings, a duplex or two townhouses with a 95% loan is possible but you have to be in a strong financial position to qualify for the home loan.

In some cases, it’s possible to build up to three houses or townhouses with a no deposit investment loan.

Can I borrow to pay for landscaping or other work?

It’s quite common to include the cost of other improvements such as a pool, a garage, a shed, a pergola, a spa, a water tanks and utility connections in the building loan.

Tip: you should obtain quotes for this work upfront or include it in your building contract price with your builder.

If you don’t provide evidence of the cost, your bank may not approve the extra money for you.

Can I borrow a little extra?

It’s a good idea to have a buffer or contingency in case of unexpected construction costs or a change of plans.

No deposit loans will only allow you to borrow 100% of the total cost of the land and construction contract.

You can only borrow over 100% of the cost if you have a guarantor that can offer their property as additional security.

We recommend that you budget a minimum of $5,000 in case of unforeseen costs.

How does the bank pay the builder?

The bank will pay the builder directly in a process known as construction drawdowns.

Once the builder presents you an invoice, all you need to do is sign a form and send it over to the bank.

Then, the bank will deposit the money into the builder’s bank account.

In some cases, and almost always for the final drawdown, the bank will send a valuer to the property to complete a progress inspection.

A progress inspection may delay the payment to the builder for up to one week

To avoid this, we recommend that you put in your drawdown requests as soon as possible so that you don’t delay the payment to your builder!

What documents will I need?

• Building contract / quote: If you have chosen a builder then you’ll need either a formal quote or the final building contract so that the bank can assess the loan. The building contract should include the drawdown schedule requested by the builder.
• Builder’s licence / insurance details: Your builder must have the required licences and insurances for your state. Always check that your project is covered by Home Building Compensation (HBC) or the equivalent for your state.
• Council approved plans: Drawings of the proposed building that have been approved by the council will be required so that the bank’s valuer can assess the on-completion value of your property.
• Quotes for other work: Please provide quotes for any landscaping, sheds, pools or other work that won’t be completed by the builder.

What if I’m an owner builder?

If you’d like to know which lenders offer the cheapest no deposit building loans, please complete our free assessment form or call us on 1300 889 743 and our specialist brokers will get back to you with the most suitable rates and fees.