Construction loan fees add between $3,000 and $8,000 to the cost of building a new home, depending on your lender and how many progress payments your builder schedules.
If you're planning to build in Forest Lake, understanding which fees apply and when they're charged helps you budget accurately from the start. Some fees appear once at application, others recur with each drawdown, and a handful depend on whether you're using a fixed price building contract or managing trades yourself.
Application and Establishment Fees
Most lenders charge an upfront application fee between $600 and $1,200 to assess your construction loan. This covers the lender's initial review of your building contract, council approval, and financial position. Some lenders waive this fee during promotional periods, but you should expect to pay it unless your broker confirms otherwise.
Consider a buyer financing a house and land package in Forest Lake. They submit a fixed price building contract with a registered builder, along with council plans showing approval for a single-storey home on a 450-square-metre block. The lender charges a $900 application fee and a $600 establishment fee once the loan is formally approved. These fees are typically added to the loan amount rather than paid upfront, though paying them in cash reduces the total borrowed.
Progressive Drawing Fees
Every time your builder requests a progress payment, the lender charges a progressive drawing fee. This fee covers the cost of sending a valuer or building inspector to verify that the stage of work matches what your builder is claiming. Most lenders charge between $150 and $400 per drawdown, and with a typical construction draw schedule involving five to six payments, you're looking at $750 to $2,400 across the build.
If your builder operates on a seven-stage progress payment schedule, you'll pay this fee seven times. The fee is deducted from each drawdown before funds are released to the builder, so it doesn't require separate payment, but it does reduce the amount available for each stage.
Valuation Fees for Land and Finished Property
You'll pay for at least two valuations during a construction loan: one when you purchase the land, and another when the build is complete and you convert to a standard home loan. Each valuation typically costs between $200 and $600, depending on the property type and location.
In Forest Lake, where most new builds are on residential blocks between 400 and 600 square metres, valuation fees sit around the $300 to $400 mark. If you're building in a newer estate near the Forest Lake Parklands or closer to the town centre, the valuer will reference recent sales of comparable homes to determine whether the land value and projected build cost align with the lender's lending criteria.
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Progress Inspection Fees
Some lenders bundle progress inspection costs into the progressive drawing fee, but others charge separately. A progress inspection fee covers the cost of a qualified building inspector visiting the site to confirm that work has been completed to the required standard before releasing funds.
This fee ranges from $100 to $300 per inspection, and the number of inspections matches the number of drawdowns. If your lender charges separately for inspections, factor in an additional $500 to $1,800 across the build.
Building Insurance During Construction
Your lender will require building insurance from the day construction starts. This is separate from the builder's contract works insurance and covers the structure itself in case of damage during the build. Annual premiums vary depending on the rebuild value but typically range from $400 to $1,200 for a standard residential build.
In Forest Lake, where most new homes are project builds on estate blocks, annual building insurance premiums sit closer to the lower end unless you're constructing a larger custom design with higher rebuild costs.
Legal and Settlement Fees
You'll pay legal fees twice during a land and construction package: once when you settle on the land, and again if you're converting from a construction facility to a standard home loan after completion. Each settlement can cost between $800 and $1,500 in conveyancing fees, plus government charges.
In Queensland, you'll also pay transfer duty on the land purchase, though this isn't a lender fee. Your solicitor or conveyancer will itemise these costs during the settlement process.
Interest Charges During Construction
While not a fee in the traditional sense, interest during construction is a cost you'll pay monthly. Lenders only charge interest on the amount drawn down, not the full loan amount, but you'll typically make interest-only repayment options during the build. Depending on the construction timeline and how quickly your builder progresses through stages, you could pay several thousand dollars in interest before the build is finished.
If your build takes six months and you've drawn down half the loan amount by month three, your interest charges will be lower than if the build drags out to twelve months with uneven drawdowns.
Loan Variation Fees
If you change your building contract after loan approval, such as upgrading fixtures or adding rooms, the lender may charge a variation fee to reassess the loan. This fee is usually between $150 and $500, depending on the complexity of the change.
In practice, most buyers lock in their design before applying for construction finance to avoid this cost. If you're considering upgrades, finalise them with your builder before lodging the construction loan application.
Ongoing Account Fees
Some lenders charge a monthly account-keeping fee during the construction phase, typically between $10 and $20 per month. Over a six-month build, that adds $60 to $120 to your total costs. Many lenders waive this fee for construction loans, but confirm whether it applies when comparing loan options.
Fees to Watch When Using a Cost Plus Contract
If you're acting as an owner builder or using a cost plus contract instead of a fixed price building contract, some lenders charge higher progressive drawing fees or require more frequent inspections. This reflects the additional risk the lender takes on when there's no fixed price guarantee.
Owner builder finance typically involves additional scrutiny at each drawdown stage, which can push progressive fees toward the higher end of the range. If you're managing trades directly, budget for at least $500 more in total fees compared to a standard fixed price contract with a registered builder.
Call one of our team or book an appointment at a time that works for you. We'll walk you through the fee structure for your specific build and lender, so you know exactly what to budget before you start.
Frequently Asked Questions
What is a progressive drawing fee on a construction loan?
A progressive drawing fee is charged by the lender each time your builder requests a progress payment. It covers the cost of inspecting the work and verifying that the stage is complete before releasing funds. Most lenders charge between $150 and $400 per drawdown.
How many valuations do I need for a construction loan?
You'll typically pay for two valuations: one when you purchase the land and another when the build is finished and you're converting to a standard home loan. Each valuation costs between $200 and $600.
Are progress inspection fees separate from drawing fees?
It depends on the lender. Some lenders include the inspection cost in the progressive drawing fee, while others charge separately. If charged separately, expect to pay an additional $100 to $300 per inspection.
Do I pay interest during construction?
Yes, but only on the amount drawn down so far, not the full loan amount. Most construction loans require interest-only repayment options during the build, with the amount increasing as each progress payment is released.
What happens if I change my building contract after loan approval?
The lender will usually charge a variation fee to reassess the loan based on the updated contract. This fee is typically between $150 and $500, depending on the scope of the changes.
