Building your dream home while working FIFO schedules presents unique challenges, especially when it comes to financing. If you're a FIFO mobile plant operator looking to purchase land and construct a new home, understanding construction loans is crucial for turning your vision into reality.
What makes construction loans different
Construction loans work differently from standard home loans. Rather than receiving the full loan amount upfront, you'll access funds through progressive drawdown as your build reaches various stages of the project. This means lenders only charge interest on the amount drawn down, which can result in significant savings during the construction period.
The loan amount is determined by an 'as if complete' valuation of your finished property, giving you a clear picture of your borrowing capacity from the start. Most lenders also offer interest-only repayment options during construction, helping manage cash flow while your home takes shape.
Understanding the progressive payment structure
Construction loans operate on a Progressive Payment Schedule, with funds released at construction milestones. Typical stages include:
• Foundation and slab completion
• Frame completion
• Roof and wall cladding
• Internal fit-out completion
• Practical completion
This progressive drawdown system protects both you and the lender, ensuring work progresses appropriately before additional payments are released. Your registered builder will coordinate with the lender for inspections at each milestone.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at FIFO Home Loans today.
Essential requirements for land purchase construction loans
When applying for a loan to purchase land and build, you'll need several key elements in place:
Council approvals: Ensure your chosen land has appropriate council plans and permits. Check council restrictions and council regulations that might affect your build plans or require a development application.
Fixed price contracts: Most lenders require fixed price contracts with your registered builder to approve your loan amount. This provides certainty around costs and prevents budget blowouts.
Professional team: You'll need qualified professionals including plumbers, electricians, and other licensed tradespeople. Your builder typically coordinates these sub-contractors.
Timeline requirements: Most construction loans require you to commence building within a set period from the Disclosure Date, usually 6-12 months.
Planning your land purchase and build
Before diving into the streamlined application process, make a plan covering these key areas:
Location and budget: Identify your ideal location and realistic price range. Consider proximity to airports for your FIFO schedule and local amenities for your family.
Land suitability: Ensure you're purchasing suitable land for your intended build. Some blocks may require additional costs for site preparation or have restrictions on dwelling size.
Build vs renovation: Decide whether you want a completely new build, need to demolish existing property, or if major home renovations might suit your needs better.
Accessing construction loan options
As a FIFO worker, you can access construction loan options from banks and lenders across Australia through specialist mortgage brokers who understand your unique income structure. Different lenders offer varying interest rate options and terms, so comparing multiple offers is important.
Some lenders charge a Progressive Drawing Fee for each payment release, typically ranging from $300-$500 per drawdown. Factor these costs into your overall budget when comparing loan options.
Alternative construction financing approaches
Beyond traditional land purchase and build scenarios, construction loans can support:
• House & land packages from developers
• Buying off the plan developments
• Custom builds on existing owned land
• Home improvement loan options for major renovations
Each approach has different requirements and payment structures, so understanding which option aligns with your situation is important.
Managing the construction process
During construction, stay aware of potential additional payments outside your original contract. Out of Contract Items not included in fixed price contracts can impact your budget and may require additional financing.
Regular communication with your builder helps ensure progress stays on schedule and within budget. Many FIFO workers find having a trusted local contact to oversee progress invaluable during roster periods.
Working with a renovation mortgage broker who understands construction financing can provide ongoing support throughout your build journey. They can help address issues that arise and ensure your loan structure continues meeting your needs.
Building your dream home while managing FIFO work commitments requires careful planning and the right financing structure. Construction loans offer flexibility through progressive payments and interest-only options during the build phase, making them ideal for your situation.
Call one of our team or book an appointment at a time that works for you to discuss your construction loan options and start planning your new home journey.
