No repayments until sold?

Hi everyone,

We're currently in the process of going through all the ins and outs before we demolish our property and build two on the vacant block of land. The plan is to keep one as a PPR, and sell the other one as soon as it's completed.

Naturally, we'll need a loan for the exercise. I've heard of a distant relative do this (I'm getting there), but don't know how true that is. Apparently when she was subdividing her land in order to sell, she took on a loan from her bank on the condition that it will be repaid once all blocks of land are sold, but no repayments are made in the meantime. Her argument was that if she had the money to subdivide the land, she wouldn't be turning to the bank for a loan in the first place (my best guess is she didn't have the cash flow during the subdivision process to be making loan repayments as well). She was in her 70's at that time, and the land she subdivided was worth around the million dollar mark. I know they wouldn't have given her a loan on equity alone, but also on serviceability.

My main question is if loans of this type exist nowadays, or some sort of a clause or agreement with the bank, which states that the loan will be fully paid off upon the sale of the investment property, as opposed to making the expected weekly/fortnightly, etc., repayments during the construction process?

I'm not familiar with construction loans, but it seems illogical to me to be making repayments on a loan for a property that isn't complete yet. Provided the property will be used as security for that loan anyway, the bank will be fully secured, so the alternative of selling the property to pay off the loan is always there to begin with (which is the purpose of this subdivision and construction process).

I'd really appreciate it if someone sheds some more light on the matter. My broker's reassured me that based on the equity in my current PPR, obtaining a loan will be easy, but that's not my concern at all. Please excuse my ignorance if it's sounding far-fetched, but how likely is it that a bank or any financial institution will agree to having its money back only when the property has finally been constructed and sold, and the money's there to pay the debt?

Thank you!