Two contracts, one plan
With a house-and-land package you usually sign a land contract and a separate building contract. The land often settles first, sometimes months before construction starts, so you may begin repayments on the land loan early.
The stages
Builders invoice at set stages: deposit, slab, frame, lock-up, fixing and completion. Each time, the lender checks the work and pays the builder directly. Your interest is calculated only on the amount drawn so far.
What to check before you sign the build contract
Lenders have rules about how much can be paid at each stage and whether the price is fixed. A broker should review the payment schedule before you sign, not after.
Budget separately for driveways, fencing, landscaping and window coverings, which are often not included.
Rebuilding instead? See knock-down rebuilds and granny flats.
A typical progress payment schedule
| Stage | What's complete | Typical share of contract |
|---|---|---|
| Deposit | Contract signed | Often 5% (NSW caps deposits at 10%) |
| Base / slab | Foundations and slab poured | Around 15–20% |
| Frame | Frame up and inspected | Around 15–20% |
| Lock-up | External walls, windows and doors | Around 25–35% |
| Fixing | Internal linings, cabinets, fixtures | Around 15–20% |
| Completion | Occupation certificate issued | Balance |
Percentages are indicative. NSW home building contracts set the actual schedule, and deposits on residential building work are capped by law. Your conveyancer or solicitor can review the contract.
How each payment is released
- The builder issues an invoice for the completed stage.
- You sign an authority to pay.
- The lender may send a valuer to check the progress.
- The lender pays the builder directly, and your interest increases on the new drawn balance.
Variations and cost overruns
Changes during the build, called variations, add cost. The lender usually wants any extra paid from your own funds first, or an approved increase to the loan. Keep a contingency of 5–10% if you can, and talk to us early if costs change.
Buying a package in the north-west? Read our house-and-land guide for Marsden Park, Schofields and Box Hill.
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