Why Are Progress Payments Important to Contractors?
Some owner-builders take on a large role when building their dream home. Others hire contractors to take care of it. Then, the contractors hire subcontractors. All parties must receive payment. Otherwise, they might not show up the next day to work. Experienced contractors and subcontractors know that their pay comes from progress payments. That’s why it’s nice to work with veterans from the construction field.
Construction loans differ from residential mortgages. Lenders acknowledge that some individuals prefer to build their homes. However, lenders shy away from funding something that does not exist except on paper. The majority of construction projects in Australia reach the finish line. Some experience delays and others go over budget.
To keep things moving as outlined during the application process, lenders establish milestones. When the construction projects reach them, the borrower can request the funds. In several cases, the lender sends the funds directly to the contractors. Then, the contractors pay the subcontractors. More importantly, they help contractors manage their cash flow.
When owner-builders and investors hire the best crew, all the moving parts work in harmony with each other. Since the contractors know that payments arrive in percentages, they understand the phases of the project. Thus, they work to complete them according to the schedule. Contractors also aim to deliver quality work.
Homeowners, owner-builders, and investors can enjoy our online Mortgage House mortgage repayment calculator for free.
Progress Payments and Construction Loans Conclusion
Several moving parts exist in construction projects. For example, the contractors and subcontractors must receive payment. Progress payments pay the professionals who build the home. To explore your construction loan options, contact our Mortgage House loan specialists.