A construction loan releases funds in stages—slab, frame, lock-up, fixing, completion—so you pay interest only on the balance actually drawn. The lender values the project on an “as-if-complete” basis, then issues a facility limit (generally 80-90 % of total cost). Each progress payment is authorised after an on-site inspection and builder invoice. During the build the product is interest-only; when the occupancy certificate issues, it converts automatically to a standard mortgage with principal-and-interest repayments. Owner-builder approvals require stronger equity; fixed-price contracts attract smoother progress-draw schedules. Typical construction term: 12–24 months.