What is a knockdown rebuild loan?
A knockdown rebuild loan allows you to demolish an existing property and build a new one on the same land.
This typically involves:
- financing the demolition of the current structure
- funding the construction of a new home
- structuring the loan across multiple stages
- aligning payments with the build process
It combines elements of both refinance and construction lending.
How knockdown rebuild loans work
These loans are structured differently to standard purchases or builds.
This typically involves:
- assessing the current property and land value
- confirming demolition scope and costs
- structuring a construction loan with staged payments
- aligning the loan with your building contract
- releasing funds progressively during construction
In many cases, your existing loan may be refinanced into the new structure.
How lenders assess knockdown rebuilds
Lenders assess both the existing property and the proposed build.
They will typically consider:
- land value and location
- existing loan position (if applicable)
- demolition costs and process
- building contract and builder credentials
- total project cost and feasibility
- loan-to-value ratio (LVR)
- borrowing capacity and servicing
Different lenders have different policies around demolition and rebuild scenarios.
Common challenges with knockdown rebuilds
These projects involve more moving parts than a standard build.
Common issues include:
- underestimating demolition costs
- delays between demolition and construction
- structuring loans that don’t align with build stages
- choosing lenders with restrictive construction policies
- insufficient buffers for variations
- valuation risks on the completed property
- poor coordination between builder, lender and timeline
These challenges can affect both approval and the build process.
How we structure knockdown rebuild loans at Evolve
We focus on aligning the full project — from demolition to completion.
This includes:
- reviewing your existing property and loan structure
- assessing total project costs (demolition + build)
- selecting lenders suited to rebuild scenarios
- structuring staged payments to match construction
- ensuring buffers for cost variations
- coordinating timing between demolition and build
- positioning the loan to minimise delays and risks
The objective is to create a structure that supports the entire project — not just one stage.
Speak with a broker before starting a knockdown rebuild
Knockdown rebuilds require careful planning and coordination.
Before proceeding, it’s worth understanding:
- how demolition and construction will be funded
- how lenders will assess your full project
- what risks exist around timing and cost
- how your loan will be structured across stages
- how to avoid delays or funding issues
A well-structured loan keeps your project moving. A poorly structured one can create unnecessary complications.
Speak with Evolve Lending & Finance to review your structure and next steps.