Commercial property · construction finance
Funding the build, drawn as you progress.
Progressive drawdown loans for commercial construction projects. Different from development finance (which includes land and broader funding). Construction loans fund the build itself, drawn against verified progress.
What it is, when it fits
Plain English, with the trade-offs.
Construction finance is a specific commercial property lending category that funds the build phase of a project, drawn progressively against verified construction progress. It differs from broader development finance (which typically includes land acquisition, soft costs, and sales-driven payouts) by focusing strictly on the construction event. Construction loans are usually structured with monthly drawdowns released after a quantity surveyor (QS) verifies cost-to-complete progress. The total loan rolls up to a fixed maximum (usually 60% to 70% of completed value) and converts to a long-term loan or is paid out at construction completion. Lender appetite varies sharply by project type (residential, commercial, mixed-use, owner-occupier vs investor-driven), builder track record, and pre-sales or pre-leasing position. Pricing 6% to 9% p.a. on drawn balance during construction.
Australian residential development under construction at dusk.
Typical scenarios
Owner-builder commercial property
Why: Owner-occupier business builds rather than buys; new factory.
Outcome: $3M construction loan, 65% LVR of completed value, converts to owner-occupier loan at completion.
Fitout and refurbishment of existing commercial
Why: Major refit of existing commercial property, 8-month build.
Outcome: $800K construction loan, drawn monthly against QS reports.
Single-asset construction project
Why: Investor building a single small commercial asset to lease.
Outcome: $1.5M construction loan, converts to commercial investment loan at lease commencement.
Build-and-hold for investment
Why: Investor building purpose-built commercial property to retain.
Outcome: $5M construction loan, takeout coordinated with anchor tenant lease commencement.
Lenders for this product
Who we work with.
- NAB Business
- CommBank Business
- Westpac Business
- Thinktank
- La Trobe Financial
- Bank of Queensland
Lender accreditation varies; not every lender is available for every deal. We pick from the panel based on your specific situation.
How it works
From brief to settlement.
- 01
Build scope review
We review build scope, builder, contingency, and pre-sale or pre-lease position before approaching lenders.
- 02
Lender shortlist
Five to eight lenders fit most commercial construction. We submit to two with the strongest current rate and policy fit.
- 03
Approval and QS engagement
Lender appoints (or accepts) QS, drawdown schedule agreed. Typical 4 to 8 weeks from application to first drawdown.
- 04
Drawdown and takeout
Monthly drawdowns against QS reports through to practical completion. Takeout to long-term loan or sale-driven payout at completion.
Indicative pricing & terms
Ranges, not promises.
Rate range
6 to 9% p.a. on drawn balance
Loan size
$500K to $20M+
Term
12 to 24 months typical, plus optional takeout to long-term
Security
First mortgage over the property; sometimes builder collateral
Indicative only; specific pricing depends on lender, security, and your business profile.
Frequently asked
Honest answers, plain English.
Progress payment structures?
Most construction loans drawn monthly against QS-verified progress. Each drawdown release requires updated cost-to-complete reporting and (for residential) sometimes builder declarations. Lender retains a holdback (typically 5% to 10%) until practical completion.
Quantity surveyor reports?
Mandatory on most construction loans over $500K. QS verifies build progress, cost-to-complete, and budget alignment. Cost typically $3K to $8K per report; budget into project costs from the start.
Cost overrun protection?
Most lenders require 5% to 10% contingency in the cost-to-complete budget. Cost overruns above contingency usually require additional borrower equity injection rather than facility increase. Plan for this; cost overruns are common and material.
Conversion to long-term loan post-construction?
Most construction facilities include a takeout option to long-term commercial loan at completion. Pricing on the takeout is usually agreed at construction loan origination; rate-protect if appropriate.
Builder approval requirements?
Most lenders maintain panels of approved builders for commercial construction. Builders not on the panel are usually possible to add via additional documentation, but the process takes weeks; engage early.
Owner-builder considerations?
Owner-builders face stricter underwriting because lender risk is higher. Some lenders won't fund owner-builds at all on commercial property. We screen lender appetite before applying.
Related products
If this isn't quite the fit.
Next step
Twenty minutes, no obligation.
Tell us the shape of the deal and the timing. We'll send a lender shortlist for construction finance or, if it isn't the right fit, an honest signal of what is.