How to fund demolition and the build
Budget for costs before the first drawdown
List the costs due before building starts, including demolition, permits, service disconnections, the builder’s deposit and any site works billed separately. Include moving, rent and storage in your cash budget. Ask whether your lender can fund demolition or other upfront costs through an approved loan increase using available equity, and when those funds would be available. Plan to cover any amounts due before funds are released with savings or another funding source agreed with your lender. Get your current lender’s consent before demolition.
Match progress payments to your building contract
After a stage is complete, the builder issues a progress claim. Check the work against your contract and confirm any required inspections have passed before authorising payment. Submit the claim and invoice to your lender. The lender may require its own inspection or valuation before releasing funds, and may require you to use your agreed contribution first. Allow time for those checks before each invoice is due.
Read the Victorian guide to construction progress payments.
What to ask your lender before signing
- Can you fund demolition, the builder’s deposit and separately quoted site works? Which bills must I pay myself, and when?
- Whose consent do I need before demolition, and what approvals, valuations or documents must be in place before the first drawdown?
- Does the proposed payment schedule fit your drawdown rules? What paperwork and inspections do you need at each stage, and how long does payment usually take?
- What happens if the valuation comes in lower than expected or a variation increases the build cost? How much cash should I keep available?
ANZ construction loan guide · Consumer Affairs Victoria guidance on deposits and progress payments