The interchange is a two-stage project that will connect Glendale and Cardiff with road links and a railway station.

Lake Macquarie council has allocated $10 million to the project, while $15 million will come from the state government and $7 million from the federal government.

However, under its 2013/14 budget for loan-funded projects, the council overestimated its expenditure on the interchange, allocating $2.1 million for design work.

With one month until the end of the financial year, the council has spent $102,000 and has deferred the remainder of the loan.

Lake Macquarie council's city strategy director, Tony Farrell, said the funds would still be required in the future.

"We will delay drawing on the funds until absolutely necessary, which is likely to be within the next two financial years," he said.

Mr Farrell said planning for the loan requirements was done two years ago.

"A lot of things have happened between then and now. The physical work on the ground hasn't proceeded yet. We are still negotiating with Rail Corp for access to use the land."

Mr Farrell said the design work would be finished by the end of the calendar year.

The project will then go to tender. The first stage of construction will connect Stockland Drive, Glendale, to Main Road, Cardiff. The second stage will focus on bridge works.