Submitting progress payments for construction loan

Progress payments are made at each stage of construction. A construction loan generally has five stages, although it can have up to eight. We may consider a change in the number of payments on a case-by-case basis, subject to credit approval.  

The below table outlines a standard five-stage construction loan.

Once your customer’s builder has completed a stage and produced a tax invoice, you’ll need to:

• arrange for your customer to sign and date the builder's tax invoice
• prepare documents required for that stage
• email documents to our Construction Loan Team.

Our team will:

• review the request and documents
• email you or your customer if all supporting documents haven’t been provided
• order a progress inspection report if required for that payment
• process the payment directly to the builder or your customer (for reimbursement claims).
  

All documents required for each construction loan’s progress payment need to be emailed to constructionpayments@macquarie.com with the APP number noted in the email subject line.

If our team needs more information to process the request, you’ll receive an email with the details of the outstanding documents required.

To ensure payments are made to the builder in a timely manner, it’s important to provide the correct documentation to our team for each progress payment.

Below we’ve outlined documents required for:

• the first progress payment
• subsequent progress payments
• the final progress payment to finalise the construction loan.
  

A builder’s tax invoice must be on the builder’s letterhead. It must:

• be signed by your customer, including a note from them stating, “I authorise payment of this invoice”, and
• include the builder’s account details noted for electronic transfer payment.
  

The homeowner’s warranty, also known as indemnity insurance, is taken out by the builder and covers the homeowners in certain circumstances if the contractor fails to complete the work and/or if the work is defective.

When providing a copy of the home warranty insurance, it must include:

• at least one applicant’s full name 
• builder’s full name and company name
• site address 
• a cover amount greater than or equal to the amount on the building contract.

The contract works insurance covers the construction works in the event they may be damaged or destroyed during the construction period.

When providing a copy of the contract works insurance documentation, it must include:

• builder’s full name and company name
• cover amount greater than or equal to the amount on the building contract
• the site address, if the insurance is a specific property cover
• the state (e.g. NSW) where the dwelling is being built if the insurance is a blanket/annual policy.
  

The public liability insurance cover the builder for losses if a member of the public (third party) is injured or if their property is damaged during the construction period.

When providing a copy of the public liability insurance documentation, it must include:

• builder’s full name and company name
• the cover amount, which must be greater than or equal to $2 million
• the site address, where the insurance is a specific property cover
• the state (e.g. NSW) where dwelling is being built if the insurance is a blanket/annual policy.
  

A progress inspection report is typically required for the slab/foundation stage (first progress payment) and the practical completion stage (final progress payment).

However, if the construction cost (e.g. the construction loan account limit), exceeds $600,000, we’ll require a progress inspection report to be completed at each stage of the build.

The process for our team to make a payment typically takes 5 business days from when we receive all supporting documents. If we don’t receive all correctly executed supporting documents, this will cause delays in payments.

Progress and final inspection reports are typically required on the first and final progress payments and can extend payment to 10 business days.

Also, if there’s a variation to the original building contract which requires further review by our Credit team, this may increase the time to process the payment.

We can reimburse your customer once they’ve made the payment to the builder, provided the funds required are included in the approved payment schedule.

To process a reimbursement claim, we'll require the following documents to be emailed to constructionpayments@macquarie.com with the APP number in the subject line:

• Receipt of payment on builder’s letterhead confirming the payment and:
  • addressed to at least one borrower’s name and property/site address
  • including a signed and dated note from your customer stating, "I authorise reimbursement of this payment"
  • requesting payment for a specific stage of the Progress Payment Schedule (the amount should align with the Schedule).

Where there has been an increase in contract amount and a change in the payment schedule, our team will need to request for further information.