While in a standard home loan, all funds are advanced at settlement with a construction loan, Lender will usually retain all of the cost to construct your property (amount stated in the fixed price building contract).
Construction loan funds are progressively drawn down at each stage of construction. Each progress draw-down is referred to as a “Progress Payment”. Progress payments are made directly to the builder. If bank is only funding a portion of the cost to construct your home, you must contribute all of your own funds before you can draw down on the loan.
There is a difference between loans for buying an established property and loans for building your own home.
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