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Construction Progress Payments: Information about construction loans
What is a construction progress payment?
A construction progress payment is a payment made by the bank or lender on completion of a building stage according to the agreed schedule. This is often called a construction loan draw down payment. The progress payment is made by your lender directly to your builder for the progress made on your construction and you get a draw down on your construction loan. Payment should only be made to the person or company whose name appears on the building contract and at the times nominated in your building contract.
How many progress payments will there be?
Typically builders request five progress payments. One at the completion of each major stage of construction.
Usually residential property construction projects are split into five stages and with a progression payment due at the end of each stage:
- the slab
- the frame
- the outer brickwork
- workable completion
The fixed price contract agreed to by you and your builder will state how many payments, how much for each payment and when the payments are due. Your lender will make the payments according to the schedule in your building contract.
How long does it take for lenders to make the progress payments?
The lender will not pay the construction progress payment immediately on your request. It can take up to 10 working days to process the first and last progress payments and five working days to process other progress payments. It is a good idea to call your lender after you send progress payment request to ensure that they are aware of it and are acting the payment.
How do I get a progress payment made?
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