Making Progress Payments
Once your loan is approved, the funds will be provided in a series of payments. These are usually made in line with various milestones that have been achieved by your builder. Importantly, these stages should be outlined in your building contract. You should note that the lender will usually release loan funds only once your own personal contributions have been used.
The loan draw downs are often referred to as ‘progress payments’, and they are typically made at six important stages of construction:
- Preparation: This is the preparation stage when your builder will organise council approvals, source materials and line up a team of skilled tradespeople so that work on your project can commence.
- Slab (or base floor): At this stage the site for your home is prepared and the concrete slab (also known as a ‘pad’) is poured. Depending on the nature of your block of land, this stage may also involve levelling the land and constructing retaining walls.
- Frame: This is where your new home starts to become a reality. Teams of carpenters will work to erect the wall frames and roof trusses giving you an idea of how your home will look.
- Lock up: This is always an exciting stage as your home is really beginning to take shape. The walls are bricked and the roofing is complete. Windows and doors will be fitted so that your home is weatherproof and can be securely locked when the builders depart each evening.
- Fit out: This will see the installation of your choice of bathroom, kitchen and laundry. Walls will be painted in your choice of colours, tiles will be set and floor coverings laid. By now you’ll be eager to move into the new building and make it your home!
- Completion: You’re on the home stretch now. All that remains is for appliances to be installed and landscaping completed if this is included in your building contract. Once these are finished, your builder will walk through the property with you to ensure everything is completed to your satisfaction. A representative of your local council will inspect your home one last time to check that it complies with the relevant building codes.
Important to Know:
Before your lender will release funds for each progress payment, you will need to provide invoices from your builder and a ‘Loan Disbursement Authority’.
The lender may also want to inspect the project before making each payment – this offers the benefit of a second set of eyes checking your builder’s workmanship