Financing the purchase of a block of land and then building a house on it can be a confusing and sometimes frustrating experience. Unnecessary stress can be avoided by simply understanding the process and knowing that you have a team of finance experts working with you to ensure that things run smoothly.
Tip: Be sure to keep a copy of receipts for ALL deposits/payments you make (eg: EOI, land deposit & Builder Fees) and forward these to your Finance Team.
Tip: Your first drawdown request for payment by the builder for work completed will be (in the example below) for $70,000 for completion to the Base stage. Keep in mind that you have already paid the builder the 5% in advance for the preparation of drawings before your building commenced.
This must be reconciled with the Bank at this time to ensure that this payment is accounted for otherwise the Bank will short pay the Base invoice by $17,500. This is the only part of the entire Progress Payment process that can be tricky. Be sure that your Finance Team has a copy of your receipt for the Deposit stage as early as possible to ensure a smooth process from the beginning.
A typical Payment Schedule could look like this