Turnkey vs Progress Payments for a New Build

When you are planning a new home, understanding when you will pay is just as useful as knowing the price.

You may hear the terms turnkey and progress payments. They describe different payment arrangements, but the details depend on the actual offer and contract. Your lender also needs to approve the funding structure for your circumstances.

Here are the questions to work through before choosing an arrangement.

Start with the payment dates

Under a turnkey arrangement, a contract deposit is typically paid first, with the balance due at the agreed completion or settlement stage. Check the terms for the particular property.

With progress payments, money is paid at agreed stages as work proceeds. Land payments and ownership arrangements also need to be understood.

Ask for the full schedule in writing. The Classic Builders House + Land pathway is a starting point, but the agreement for your home is what sets out the obligations.

Look at costs outside the contract payments

Even where the main balance is due later, you may still have legal costs, lender requirements, moving costs or items outside the package to arrange.

You may also be paying rent or an existing mortgage while waiting to move. Include those costs when comparing the options, rather than looking at the deposit alone.

Understand how progress payments work with your lender

Ask what evidence your lender needs before releasing each payment and how much time to allow. Confirm any inspection, valuation or drawdown fees.

Your borrowing and interest costs can change as funds are drawn. Ask the lender to explain the actual cash flow for the proposed schedule.

Compare the whole journey

Put the deposit, payment dates, finance costs and living costs into the same comparison. Check what happens if the programme changes or an approved variation adds to the price.

Neither label tells you automatically which option is cheaper or more suitable. The contract, scope and lender's terms need to be considered together.

Keep fixed price separate

Fixed price describes the agreed scope and contract terms. It does not mean every extra is included, and it is a separate question from when payments are due.

Ask about allowances, exclusions and variations. Get legal advice on the agreement before you commit.

Take a clear set of questions to your lender

·         Does this funding structure suit the offer I am considering?

·         How much of my own money is required, and when?

·         What documents, valuations or inspections are needed?

·         What costs should I allow for through to completion?

Our deposit guide explains why a contract deposit and lender equity are different. You can also read the Classic Builders House + Land buyer's guide.

Talk with your Classic Builders team about the proposed payment schedule, then take the actual documents to your lender and solicitor.