Cost to Complete

“Cost to Complete”
Cost to Complete is a technical term for a more traditional progress payment loan. It is based on a formula that attempts to provide a partial value for an unfinished build.  This can be unsatisfactory in many cases, and can often leave you significantly short of funds to pay your builder. You are normally required to provide progress valuations (at considerable expense) to determine how much it would cost to complete your home. The bank never agrees to the terms of your build contract, and can, at their discretion, stop making progress payments if they deem the value to be insufficient, or if you are not keeping up with your interest payments.

A valuation may not reflect the actual costs incurred by the builder resulting in a miscalculation of costs to complete (e.g. is a concrete slab worth what you are paying for it, or is the value of the slab only evident on completion of the build?). The lender may then fund 75-80% of the valuation figure, less their retention, which may not be enough to pay the balance owed to your builder. This could cause a substantial shortfall in payment to your builder which may cause unnecessary delay, and has from time to time force builders to stop the project altogether as they have insufficient funding to continue.  


Waiting for valuers can take several weeks for each inspection, adding to the potential for delays.


NewBuild Does not re-assess value at each stage
NewBuild Plan sets out a predetermined payment schedule based on the total contract price. A small retention is held upon completion to ensure the home is finished to your satisfaction.