16 Apr 2022

What Are the Five Phases of Construction?

Five Phases of Construction

Construction projects take place in five stages. For lenders, the stages determine when they will disburse the payments. Construction loans have progress drawdowns instead of releasing the funds in one lump sum. 

Let’s look at the five phases of construction for most projects.

Slab/Base. After the owner-builder or investors pay their construction teams a deposit, the teams start on the base of the property. Once the teams complete it, lenders release between 10% to 16.5% of the total construction loan. This allows the borrower to ensure that they pay their construction crew.

Brickwork/Frame. Next, construction teams put up the property’s frame. When they complete it, lenders release between 15% to 26% of the construction loan.

Roof/Enclosure. After the base and the frame, the construction teams add the roof to the property. This earns them between 24% to 35% of the construction loan.

Lockup/Fixing. Once the property has a base, walls, and a roof, the construction teams add the home or structure’s infrastructure. They might bring in the painter at this stage too. In most cases, lenders release 20% of the construction loan.

Completion. The last step is the completion stage. Lenders release the remainder of the loan.  

When the project is declared complete, borrowers must take action on their loan. Owner-builders can roll it into a mortgage. Check out our Mortgage House mortgage calculator to see your potential options.

Five Phases of Construction Conclusion

Owner-builders and investors need to understand the five phases of construction. The stages impact the disbursement of payments. To discuss construction loans in more detail, contact our Mortgage House loan specialists.

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