Construction Loans › How do progressive drawdowns work on a construction loan?

How do progressive drawdowns work on a construction loan?

Instead of paying the full loan at settlement, the lender releases funds to your builder in instalments, called drawdowns, as each building stage is completed. You generally pay interest only on the amount drawn so far.

Written by Ross McFarlane, Licensed Mortgage Broker (Credit Representative 526725). About the author

Why this matters

Progressive drawdowns keep your costs lower at the start, because you are not paying interest on the whole loan from day one. Each stage is verified before funds are released, which also keeps the build on track. Knowing the schedule helps you and your builder plan invoicing without delays.

The key points

Funds are released stage by stage to the builder.
Each stage is checked before money is released.
Interest applies only to the drawn amount.
The schedule is set by your building contract.

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Last reviewed: June 2026

General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.