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BUILDING FINANCE EXPLAINED: TURNKEY VS PROGRESS PAYMENTS
When you’re looking at building your first home, the money talk can feel like alphabet soup - turnkey, progress payments, fixed price, cost-plus. Enough jargon to make you wonder if you should just stay renting.
So let’s cut through it.
At Classic, we only do fixed-price builds. That means what you agree to at the start is what you pay at the end. No surprise extras, no “forgot to mention the driveway is extra.” But within that, you’ve still got two ways to pay: turnkey or progress payments.
The stuff we don’t do
Some builds run on “estimates” or cost-plus contracts. That’s a flash way of saying you carry all the risk. If timber goes up, you pay more. If a tradie takes longer, you pay more.
Looks cheap upfront, but it’s a bit like buying a $1 reserve do-up at auction - exciting until you realise the bathroom floor’s being held up by a bit of 4x2 and hope.
To be fair, there is a place for cost-plus. If you’re a professional developer who knows the ins and outs of building, managing risk and squeezing margins, it can make sense. But that’s not the world we play in. At Classic, we value transparency and peace of mind, so fixed price is the only way we roll.
What’s a turnkey build?
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Pay a deposit now, then nothing more until handover day
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Build carriers the finance in the meantime
Why investors love it: It’s clean and simple. No payments until tenants are ready to move in.
Why new-home buyers don’t always: You usually pay more overall (because the builder’s taking on the finance risk). And you don’t get much chance to tweak once things are underway.
What are progress payments?
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You pay in stages as the build goes up - slab, framing, roof, etc.
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The bank releases funds at each stage, so you’re only paying for what’s been completed.
Why new-home buyers love it: Usually cheaper overall (because you’re not paying for the builder’s finance risk), banks prefer it, and you know exactly what you’re paying for as the home takes shape.
The details: There can be a slight juggle of rent + small repayments during construction. But depending on your lender, there are often interest-only repayment options that can largely be offset through smart loan structuring.
Some lenders also offer variations - like paying your full deposit upfront so the bank doesn’t outlay anything at first, or splitting your deposit and loan funds to give you more time to build up personal savings. Every situation’s different, so it’s best to confirm the details with your bank.
So which one’s right for you?
New Home Buyers: Progress payments are usually the smarter path - affordable, bank-friendly, more control.
Investors: Turnkey may suit better - no mid-build payments, just settle when it’s ready. But, like most financial situations: it depends.
The Classic way
We keep it simple. With options to suit how you want to pay - whether that’s progress payments during construction or turnkey at handover - you’re in control.
And either way, you’ll get a fixed price contract so there are no surprises.
Want to know which option fits your build? Book a chat with the Classic crew – we’ll walk you through the numbers, the trade-offs, and help you figure it out.
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