As a FIFO fixed plant operator, you've probably thought about building your dream home during your time off. Construction loans can help turn that vision into reality, but understanding the building finance regulations and loan structures is crucial for making informed decisions.
What Are Construction Loans?
Construction loans differ significantly from standard home loans. Instead of receiving the full loan amount upfront, you access funds through progressive drawdown as your build reaches various stages of the project. This means you only charge interest on the amount drawn down, which can save you thousands of dollars during the construction phase.
The loan structure typically involves:
• Progressive Payment Schedule aligned with construction milestones
• Interest-only repayment options during the building phase
• 'As if complete' valuation based on your finished home's projected value
• Progressive Drawing Fee for each payment release
Building Finance Regulations You Need to Know
Before applying for a loan, understanding the regulatory requirements will help streamline your application process. Most lenders require:
- Registered Builder: Your builder must hold appropriate licences and registrations
- Council Plans and Permits: All necessary approvals must be in place
- Fixed Price Contracts: Clear documentation of costs and timelines
- Suitable Land: The block must meet council restrictions and regulations
For FIFO workers, these requirements become particularly important as you'll need to coordinate approvals while potentially being on-site.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at FIFO Home Loans today.
Types of Construction Projects Covered
Construction loans can finance various building projects:
• New Build: Starting from scratch on suitable land
• House & Land Packages: Combined purchase and construction
• Major Home Renovations: Significant improvements to existing properties
• Buying Off the Plan: Properties purchased before completion
Some projects may require you to demolish existing property before commencing the new build, which adds complexity to the loan structure and timing.
The Progressive Drawdown Process
Understanding how progressive payments work is essential. Your lender releases funds in instalments as your build reaches predetermined construction milestones. Common stages include:
- Slab completion
- Frame and roof completion
- Lock-up stage
- Fixing stage
- Practical completion
This system protects both you and the lender while ensuring your registered builder and sub-contractors receive payment as work progresses. Each drawdown typically incurs a Progressive Drawing Fee, so factor this into your budget.
Special Considerations for FIFO Workers
Your FIFO schedule presents unique challenges when managing construction projects. Consider these factors:
• Communication: Establish clear contact methods with your builder while on-site
• Progress Monitoring: Arrange for trusted representatives to inspect work during your absence
• Timing Requirements: Most loans require you to commence building within a set period from the Disclosure Date
• Documentation: Ensure all permits and council plans are finalised before leaving for work
Planning Your Construction Project
Before approaching lenders, make a plan that includes:
• Ideal Location: Research areas that suit your lifestyle and work patterns
• Price Range: Determine realistic loan amount expectations based on your income
• Development Application: Understand any special requirements for your chosen area
• Out of Contract Items: Budget for costs not included in your building contract
Many FIFO workers find that involving experienced plumbers, electricians, and other trades early in the planning process helps avoid delays and cost overruns.
Accessing Construction Loan Options
You can access Construction Loan options from banks and lenders across Australia, each offering different interest rate structures and terms. Some lenders specialise in FIFO worker loans and understand the unique challenges of your work arrangements.
Working with a renovation Mortgage Broker who understands FIFO employment can help you compare options and find loan structures that accommodate your roster patterns. They can also help you understand which lenders offer the most suitable progressive drawdown terms for your project type.
Whether you're planning a home improvement loan for renovations or financing a complete new build, understanding these regulations and processes will help you make informed decisions about your construction project.
Call one of our team or book an appointment at a time that works for you to discuss your construction loan options and how we can help make your building project a reality.
