Construction loans are where deals fall over — progress payments, build contracts, valuations mid-build. It's also where I'm strongest, because I came from construction. If you're building in Sydney, this is the desk to sit at.
A land-and-build loan funds the block and the construction under one facility, with the build portion drawn down as the build progresses — not as a lump sum.
The lender releases money in stages — slab, frame, lockup, fixout, completion — paying the builder as each stage is verified. You generally pay interest only on what's been drawn, which keeps repayments lower during the build.
Fixed-price build contract, council approvals, insurances, variations — lenders scrutinise all of it. This is where builds stall with the banks, and where a broker who speaks builder saves you weeks.
A granny flat build in Sydney can add a second income stream to a block you already own. Funding it usually means accessing equity in your existing property or structuring a construction facility — and the right route depends on your equity, income and long-term plan.
Use existing equity to fund the build — often the simplest route if your current loan has headroom.
A staged construction loan against the improved value of the property, drawn as the flat goes up.
Building to rent it out? Ownership structure and loan setup affect tax and future borrowing — worth getting right before the slab is poured, alongside your accountant's advice.
I'll compare which lenders are actually comfortable with granny flats — they vary more than you'd think — and run the numbers on your block in the first call.
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