You need a Construction Loan when you want to build a new property, whether it is on a block of land that you already own or part of a House & Land package. A Construction loan is generally drawn down in stages as the builder reaches the different milestones stipulated in the Building Contract.

These stages are generally:
The base stage (i.e. when the concrete slab is laid)
The frame stage (i.e. when the framework or walls are up)
Lockup stage (i.e. when the roof, door and windows are in place)
Fit out stage (i.e. when the house has been fitted out with appliances)
Completion (i.e. the house has been completed and is ready for occupation)

The lender uses an independent valuer to monitor the construction process and only makes progress payments when the builder has reached the defined stages and met satisfactory standards.