Can You Refinance a Construction Loan?

A construction loan is a specialised type of finance designed for building a new home or completing major renovations. Instead of receiving the full loan amount upfront, the funds are released in progressive stages (drawdowns) as each phase of construction is completed. Because construction loans work differently to standard home loans, many borrowers wonder whether they can be refinanced, either during the build or after completion. The short answer is: yes, refinancing is often possible, but the process depends on your lender, the stage of your build, and your overall financial position.

Can-You-Refinance-a-Construction-Loan

When Can You Refinance a Construction Loan?

Refinancing a construction loan usually happens in one of two scenarios:

Refinancing During Construction

Some borrowers consider refinancing before the build is complete, for example, if they’re unhappy with the loan structure, lender fees, or how progress payments are managed. However, refinancing mid-build can be more complex because:

  • The new lender must be willing to take over the partially completed project;
  • Additional inspections or valuations may be required; and
  • There may be break costs or discharge fees from the original lender.

Not all lenders accept partially completed constructions, so refinancing during the build requires careful assessment and professional guidance.

Refinancing After the Build Is Finished

Many borrowers choose to refinance once construction is complete and the loan converts into a standard home loan. This is generally a more straightforward process because:

  • The property can be fully valued;
  • The loan functions like any other mortgage; and
  • There are more lenders available to choose from.

Refinancing after completion can allow borrowers to compare home loan products, review fees and features, or adjust loan terms if appropriate.

Why Someone Might Refinance a Construction Loan

Borrowers may consider refinancing for several reasons, such as:

  • Seeking a home loan structure that better suits their long-term goals;
  • Reviewing fees, charges, or loan features once the construction phase ends;
  • Aligning the mortgage with future financial plans.

These reasons vary depending on individual circumstances and should always be carefully assessed with qualified advice.

What Lenders Typically Consider

Whether refinancing during or after construction, lenders generally review:

  • Your income and ability to meet repayments;
  • The percentage of the construction completed (if refinancing mid-build);
  • The property’s completed value (if refinancing after construction);
  • The builder’s credentials and contract;
  • Your credit history and financial conduct.

Policies differ between lenders, and some may require additional documentation, valuations, or inspections before approving a refinance.

Things to Consider Before Refinancing

Before deciding to refinance your construction loan, it’s important to consider:

  • Costs: Discharge fees, mortgage registration fees, and potential break costs.
  • Valuation requirements: A new lender may need updated valuations or build progress reports.
  • Loan structure: Features such as offset accounts, repayment types, and redraw facilities may differ between lenders.
  • Timeline: Refinancing during construction can take longer due to additional checks.

Understanding these factors can help you decide whether refinancing is practical or beneficial for your situation.

Refinancing a construction loan is possible, but the process depends on the stage of construction and your overall financial position. For many borrowers, refinancing after the home is completed is the simplest option, but in some cases, refinancing during construction may still be available with the right support. Before making any changes to your loan, ensure you seek independent, licensed financial advice and consider all costs, risks, and requirements associated with refinancing. Learn how refinancing works with BrokerCo’s general guidance for home builders.

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