A knockdown rebuild loan funds a new home on land you already own, paid out in stages as the builder completes each part. We arrange the construction finance, sequence it with any property sale, and set the finished loan up in clean splits.
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A knockdown rebuild loan is a construction loan secured by your existing land. The lender usually refinances any current home loan into the new facility, then releases the building funds in stages rather than as one lump sum.
Lenders typically need these documents before a full assessment:
For a knockdown rebuild, many lenders assess the loan against what the home will be worth once built, not the land alone. The valuer works from your contract, plans and specifications to estimate the finished value.
In our knockdown rebuild case study, the couple's home was valued at $2,000,000 as if complete. The lender approved $1,400,000, which is 70% of that value, with their existing home loan refinanced into the new facility.
A lower valuation than expected reduces how much you can borrow, so the gap comes from your own funds. Valuations vary between lenders, which is one reason lender choice matters on a rebuild.
Funds are paid to the builder as each stage is completed and invoiced. Stages commonly follow this order, with the percentages set by your contract:
Site works and foundations are complete.
The structural frame is up and inspected.
External walls, roof, windows and doors are in.
Internal fit-out, then practical completion and handover.
Interest is charged only on the amount drawn, so repayments start small and rise as the build progresses. Many lenders set the loan to interest only until it is fully drawn, then switch it to principal and interest.
Many lenders also require your own contribution to be paid to the builder before they release loan funds.
Lenders lend against the fixed price contract. Anything outside it is usually yours to fund, so a cash buffer matters as much as the loan amount.
Common costs that sit outside the contract include:
In the case study, the couple contributed $302,390, or 32.5% of the $930,000 build contract, with the loan funding the remaining $627,610. Demolition came from their own money, and they kept a $333,058 buffer.
Many rebuilds are funded partly by selling another property. Signing a build contract before the sale, or selling before the finance is approved, both carry risk.
In the case study, the plan had three linked parts: the build finance, the investment property sale and the build contract. We mapped the funds to complete first:
| Item | Figure |
|---|---|
| Expected sale price, investment property | $1,100,000 |
| Less agent fees (3%) | $33,000 |
| Less miscellaneous costs | $2,000 |
| Less lending repaid on sale | $639,552 |
| Estimated net sale proceeds | $425,448 |
| Plus cash available | $210,000 |
| Total funds available to complete | $635,448 |
Once the contract was in hand and the valuation done, conditional approval was issued subject only to the sale and payout of the investment loan. They then listed the property and sold it quickly in a falling market.
Serviceability is tested on the full loan amount, even though it is drawn over time. Lenders also look at your contribution, your buffer and any rent you will pay while the home is built.
In the case study, the lender accepted $317,960 of combined income. One partner had started a new role in March 2026, and his $245,960 income was accepted on the strength of more than six years in the same industry. Living expenses of $6,061 a month were verified against three months of bank statements.
If you will rent elsewhere during the build, many lenders count that rent in your expenses alongside the loan repayments. A new job is not always a barrier where you have a track record in the same industry, though policies vary.
A couple wanted their knockdown rebuild finance confirmed before signing the build contract or selling their investment property. We secured $1,400,000 at 70% of the home's $2,000,000 as-if-complete value, against a $930,000 build contract with a $333,058 buffer retained.
Read the Case Study →A construction loan for the home you will live in is private borrowing, so the interest is generally not deductible. If debt recycling is on your radar, completion is the natural point to restructure.
Selling an investment property to fund a rebuild also clears deductible debt and replaces it with private debt, and the sale itself can have capital gains tax consequences. Your registered tax agent confirms the tax treatment.
Some households later put cash held back from the build toward a lump sum debt recycling move. The cash first pays down the home split, then an equal amount is reborrowed through the investment split to invest.
Tell us where you are and what you want to do next. We will tell you what the lending side looks like, including whether debt recycling fits later.
Request a Call With Alex →We line up the contract price, your contribution, costs outside the contract, any sale proceeds and the buffer you want to keep.
Valuation approach, approval subject to sale and income policy differ, so we match the lender to your plan.
We help you through each progress claim so the builder is paid on time and the loan tracks the build.
We review the finished loan and set up a clean loan structure with separate splits, ready for a later strategy.
It is a construction loan secured by land you already own. Any existing home loan is usually refinanced into the new facility, and building funds are released in stages as the builder completes and invoices each part. Interest is charged only on the amount drawn.
It is the valuer's estimate of what your home will be worth once the new build is finished, based on your land, contract, plans and specifications. Many lenders assess a knockdown rebuild against this value rather than the land alone, which can increase how much you can borrow.
Most lenders want a signed fixed price contract with a licensed builder before they fully assess a construction loan. Costs outside the contract, such as variations, landscaping or demolition the builder does not include, are usually funded from your own money.
Often yes. Some lenders will issue approval subject to the sale of another property and payout of its loan. That lets you list with the finance in place, rather than selling first and hoping the build loan is approved. Policies vary between lenders.
If the loan builds the home you will live in, it is private borrowing and the interest is generally not deductible. Deductibility depends on what the borrowed money is used for. Your registered tax agent confirms how this applies to your situation.
Completion is usually the cleanest point, when the loan moves from interest only to principal and interest and can be restructured into separate home and investment splits. Your financial adviser recommends whether and what to invest in.
How we set up separate home and investment splits.
Read more → GUIDEUsing savings or sale proceeds to start a strategy.
Read more → SERVICEHow home owners turn home equity into an investment loan.
Read more →
1. Arranged a loan when our small business situation made it difficult to qualify.
2. Met requirements to have funding available by a specified date.
3. Understood my needs to setup debt recycling to allow tax structuring.
4. Communicated well throughout.
I would use their services again.
Alex, Jess and the Kingfisher team were second to none and their process from start to finish was faultless. As a self-employed business owner, it can be difficult to obtain finance at the best of times. The Kingfisher team made this an easy and efficient proposition and their continued transparent and efficient communication ensured we were kept up to date at all times. Highly recommend them for your finance needs!
Alex and Jess dealt with our investment loan and provided a top tier service. They kept us up to date and communicated every step of the process making it a seamless and smooth experience! Awesome work team we will definitely be back for future loans!
Jess from Kingfisher was outstanding. I couldn't fault her communication, expertise or dedication to finding the best loan for our situation. The entire process was seamless from start to finish. We'll definitely be using Kingfisher again in the future. A top-tier organisation.
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