Construction loans

Your Fixed Price Building Contract should detail all the work your builder promises to complete as part of the project, as well as a progress payment schedule which outlines the costs and amounts payable at each stage of the project. Sometimes the Fixed Price Building Contract will include an addendum outlining the Specifications and Inclusions. Otherwise, your builder will supply these to you separately.

If you’re planning to use your own savings to pay for part of your project, you’ll need to pay this amount directly to your builder before you can start using your construction loan. If you’re wanting to use equity you have in another property to finance your project, speak to a lender to find out your options.

When the final payment has been made to your builder, your home loan moves out of the construction phase. You then have some choices to make to ensure your home loan is set up in the best way for you. Your options include:

1. do nothing and your home loan will revert to principal and interest repayments on the variable rate for your loan product (i.e. the basic variable or standard variable home loan you signed up for when you applied).
2. contact us to extend your interest only repayment period to up to 5 years for an owner-occupied home or 10 years for a residential investment loan
3. contact us to switch your loan to an alternative variable or fixed rate
4. contact us to split your loan for a mix of variable and fixed

See current rates or use our repayment calculator for more information. 

This is also a good time to check that your preferred repayment frequency and recurring payments are set and to establish an offset account if needed. 

If your invoice creates a shortfall of funds for the remainder of the build that is less than $5000, ANZ may cover this during construction, however you’ll need to pay it back at the end of construction. If it’s more than $5,000 you’ll need to use your savings to cover the difference.

If you’re experiencing long delays while building and are concerned it will take longer than 24 months from first draw down to complete construction, talk to your lender to discuss the terms set out in your Letter of Offer and your options.

If your land loan is already with ANZ, this means we already hold a mortgage on the property. Depending on whether you satisfy the relevant eligibility criteria, possible options include renewing your existing loan and adding the funds for the construction, or you can choose to keep the two loans separate. If your land loan isn’t with ANZ, we’ll need to take a new mortgage over the property. You can also talk to your lender about refinancing your land loan.

If you have money in an everyday banking account, you may choose to move it into an ANZ One offset account. You can link it to your ANZ Standard Variable loan or one-year ANZ Fixed loan to help you save on interest charges. The money you have in ANZ One will offset the amount you owe on your home loan, and you’ll only be charged interest on the difference.

A $10 servicing fee applies per month per offset account.

Find out more about offset accounts.

If you choose interest only, the minimum payment amount on your loan will be lower during the interest only period because you are not required to repay any of the loan principal. You will have to repay the principal down the track and so you may end up paying more over the life of your loan. There may be additional restrictions on the amount you can borrow or loan type you can select if you choose to pay interest only.

Choosing to repay principal and interest means that, with each repayment, you're paying off interest charges as well as some of the loan principal.

Learn more about payment types.

Interest is calculated based on the unpaid daily balance of your loan. For example, if you had a loan balance of $400,000 and your interest rate was 3% p.a., your interest charge would be $400,000 x 3% divided by 365 days = $32.87 for that day. For most ANZ home loans, interest is usually calculated daily and charged monthly. 

For details refer to the ANZ Consumer Lending Terms and Conditions (PDF) and your letter of offer.

A comparison rate is designed to help you work out the total cost of a home loan by building the known costs like up-front and ongoing fees into that rate. It doesn’t include things like government charges, redraw fees or fee waivers. 

You can use comparison rates to help you compare the cost of different home loans with similar features. When deciding which home loan is right for you, it’s important to think about what features each home loan offers, and how much these matter to you. Keep in mind that you may not necessarily pay the comparison rate that is advertised for your loan type.  This is because, for example, you may not pay all the fees and charges which the comparison rate includes.