Key Features Progressive Drawdowns: The lender pays the builder directly in installments (typically 5-6 stages: slab, frame, lockup, fit-out, completion) rather than giving you all the money upfront. Interest-Only Payments: During the construction period, borrowers typically make interest-only payments on the amount of funds drawn down so far, which helps manage cash flow while potentially also paying rent on their current housing. Short-Term Financing: Construction loans are usually short-term (e.g., up to 24 months for completion), and once the build is finished, they often convert into a permanent, long-term mortgage (a construction-to-permanent loan). Lender Oversight: Lenders often conduct inspections at each stage of construction to verify work has been completed satisfactorily before releasing the next payment to the builder.