What Are Progress Draws?
Owner-builders and investors who seek to build a new home or multi-unit structure and require financing will apply for construction loans. These loans differ from mortgages. For example, the loan features progress draws.
Lenders disburse construction loan funds in increments. They base it on the phases of construction projects. In general, lenders establish five milestones. When the construction team reaches each milestone, the borrowers fill out the appropriate form to request a progress draw. In addition, they submit documentation that supports the completion of the stage.
Several ways to establish milestones and payments exist. For example, the contractor can bill the borrower with an invoice. Then, the borrower uses it as part of their documentation to request a draw from the lender. Next, the lender sends the funds to the borrower. The lender also can send the funds directly to the contractor. When applying, loan specialists address these details among others.
Mortgage House funds construction projects for owner-builders and investors in the Australian housing market. Our loan specialists have the tools to evaluate all loan applications promptly. Moreover, they have tools to find the best loan terms for more applicants.
Construction loans have different features than home loans. Nonetheless, our Mortgage House team will walk you through the details.
Progress Draws and Construction Loans Conclusion
Since nothing exists on vacant land, borrowers must request progress draws from their construction loans. Then, lenders fund the project in stages, as they complete the work. For more information about construction loans, contract our Mortgage House loan specialists.