How progress payments work when you are the builder

The lender agrees a schedule with you at approval, usually the standard five stages with percentages tied to your costings, sometimes broken into more steps so draws are smaller and more frequent. Each stage has a defined scope: slab means the slab poured and cured, frame means frame and roof trusses up, lock-up means roof, windows and external doors on, fixing means internal linings, cabinetry and fit-off, completion means occupancy certificate and final clean. Money for a stage is released only when the whole stage is done.

This is where owner builds get into trouble. The slab contractor wants paying on completion; the lender pays you after their inspector has visited, which can be a week or more later. Same for every stage. Lenders manage this in different ways: some pay suppliers on invoice for materials delivered, some allow a small advance against the next stage, most expect you to hold a working float equal to a stage or two. Building the float into the budget from the start is what separates the owner builds that finish from the ones that stall at frame.

Each draw requires a claim form, invoices and receipts for the work, sometimes photos, and an inspection by the lender's valuer or a building inspector who confirms the stage is complete and the work is to standard. Some lenders also require the certifier's stage inspection certificates. Inspection fees apply per visit. A stage that is 90 per cent complete is not complete, and the draw waits.

Incomplete stages, invoices that do not match the costings, variations not approved by the lender, insurance lapsing, a change of trades without notice, or work the inspector considers substandard. Owner builders who keep the lender informed and submit clean claims get paid in days; those who submit a pile of receipts for work that does not match the schedule get delays that compound at the next stage.