
The Five Stages:
Purchase of the land, The pad (floor – also known as ‘bearers and joists’ for wooden floors), Roof (usually including frames), Lock up, Final. With a construction loan, you can break up the draw down of the loan amount into five progressive draws, which parallel the construction phases. As one phase of the construction is complete, you are able to draw down the next portion of the loan.
This means that interest is only being calculated on that amount which has been physically drawn down, and you are only making repayments on the portion you have used.