Construction loans are designed to fund property projects progressively rather than as one lump sum. They are commonly used for duplex, townhouse, apartment, subdivision, mixed-use, industrial and commercial developments where staged funding, project timing and exit strategy all matter.
At Formation Finance, we help structure construction loans based on the strength of the project, the security property, the funding requirement and the proposed exit, with solutions tailored to property developers and non-bank development scenarios.
Construction loans are development funding facilities where the loan is usually released in stages as the project progresses. Instead of advancing the full amount upfront, funds are drawn against completed milestones such as slab, frame, lock-up, fixing and completion.
This structure helps align funding with construction progress while allowing the lender to monitor cost, timing and delivery risk throughout the project.
Construction loans are usually drawn in stages as the build progresses. Instead of advancing the full facility upfront, funds are generally released when construction reaches agreed milestones and the required supporting documents have been provided.
This type of structure is commonly used because it keeps the funding process closer to the actual pace of the build. In many cases, interest is charged on the amount already drawn, rather than the full approved facility, which can help the funding arrangement better reflect construction progress.
Lenders usually assess more than just the security property. Construction loans are often reviewed in the context of the broader project, including the build scope, total cost, requested facility, supporting documents, timeline and contingency.
They will also usually want to understand how the project is expected to move from approval to completion, and what the intended exit will be once construction is finished. A clearer and more coherent application can make the overall funding process easier to assess.
A construction loan application is usually stronger when the supporting information clearly explains the build and the funding request.
Common documents may include:
The exact requirements can vary depending on the lender and the project, but incomplete or inconsistent documents are one of the most common reasons construction loan applications slow down.
Lenders usually assess construction loans by looking at the project feasibility, the GRV and LVR position, available contingency, time and cost risk, the quality of the security property and the strength of the proposed exit through sale, refinance or another pathway.
This matters because construction finance is not only about funding the build. It is also about whether the project can be completed and exited on a realistic timeline.
Where relevant, project planning and construction standards may also matter, particularly when a development needs to align with broader Australian building requirements such as the National Construction Code.
Construction loans are structured to fund construction projects progressively. Instead of receiving the full loan upfront, funds are distributed through progress payments monthly or per stage. This schedule outlines when and how much of the total loan amount will be released at each phase of construction. During the build, interest is only charged on the funds that have been drawn, not the entire loan amount—making construction loans a cost-effective way to manage cash flow. We also offer private construction loans for developers and builders seeking faster approvals and more flexible terms.
Yes, absolutely — duplex construction projects are commonly funded through both standard construction loans and low doc construction loans, depending on your needs and documentation.
If you’re a developer or investor building a duplex, non-bank lenders can offer more flexible terms and faster approvals than traditional banks. Whether it’s for subdivision, house-behind-house, or side-by-side dual occupancy, we can tailor construction loan solutions to match the scale and timeline of your project.
Approval times can range from a few days to a few weeks, depending on the complexity of your project and the documentation provided. Our streamlined process ensures faster decisions compared to traditional banks.
Not always. While some projects benefit from having pre-sales in place, especially for larger multi-unit developments, we assess each application individually. Our flexible approach means we may be able to offer funding without pre-sales, depending on the strength of the project and the developer’s experience.
