Stage payments

JD6910

Can anyone advise the stage payment draw down process from banks for a self build project???

I think it works like follows:

Client does the first €xxx worth of work and reaches say finish floor level (FFL) with his own funds. Independent engineer verifies that the work is up the Finish floor level and notifies the bank.

In order to provide cash flow for the next stage does the bank provide a stage payment at FFL to allow you reach say wall plate level???

muffler

Basically you spend the money and the bank reimburse you so to speak. Your letter of offer will state if you will get fixed, agreed amounts at predetermined stages or if you will get variable amounts at various stages.

Take BOI as an example. When you are at floor level your engineer will carry out an inspection and submit a stage payment cert to your solicitor who will pass it to the bank with any other documents he/she needs to furnish. The amount on the stage payment cert will be the value of the work carried out up to that point. But the bank will then pay out 92% of the certified amount.

sydthebeat

JD6910 wrote: »

In order to provide cash flow for the next stage does the bank provide a stage payment at FFL to allow you reach say wall plate level???

the answer to this particular point is no.

The bank will not / should not release funds to cover work that is not in place on site, therefore either the builder or client is expected to be able to have a line of credit / cashflow in place to fund the work until stage payments are released.

At no stage can the certifier recommend releasing monies to cover work not carried out (and 'fixed' on site... ie windows on site but not installed would not be covered.)

Deposits etc can be covered once documentation is in place to prove requirement.

Some financial institutions will insist on clients using their own monies first up, so that they are not fully exposed should things go tits up.

JD6910

sydthebeat - if we use our money up front - how do we finance the next stage of the build??

for example - i start on site and get it to FFL with my money. how do i pay to get it to the next kevel????

sydthebeat

JD6910 wrote: »

sydthebeat - if we use our money up front - how do we finance the next stage of the build??

for example - i start on site and get it to FFL with my money. how do i pay to get it to the next kevel????

as i said, you or the builder is expected to hold a line of credit.

If you want to use your own money, which is included in the mortgage details... then come to an agreement with your bank as to how you use it.

Im just saying what some banks insist on happening....

you must understand that the mortgage stage payments are to cover work already carried out on site.....

JD6910

you must understand that the mortgage stage payments are to cover work already carried out on site.....

that is where my question is originating from!!!

if the bank insist i use ALL my funds FIRST, then how do i get to the next level cany understand these banks!!!!:p

sydthebeat

well lets stop talking about "ifs" here.....

have you contacted your bank on this?

runawaybishop

JD6910 wrote: »

that is where my question is originating from!!!

if the bank insist i use ALL my funds FIRST, then how do i get to the next level cany understand these banks!!!!:p

You pay for work done when the bank releases the cash, with prior agreement with your contractors.

edited: to fix quotations
sydthebeat

muffler

JD6910 wrote: »

you must understand that the mortgage stage payments are to cover work already carried out on site.....

that is where my question is originating from!!!

if the bank insist i use ALL my funds FIRST, then how do i get to the next level cany understand these banks!!!!:p

I answered this for you in my first post. You spend the money and the bank reimburse you so you then have funds again to progress to the next stage/level

muffler

Something completely different....there seems to be a wee glitch in the system regarding quoted posts and quote tags.

JD6910

muffler wrote: »

I answered this for you in my first post. You spend the money and the bank reimburse you so you then have funds again to progress to the next stage/level

lets say i spend €60K and get her up to FFL. will the banks therefore according to you reimburse me €60K to allow me drive on to the next stage??

JD6910

sydthebeat wrote: »

well lets stop talking about "ifs" here.....

have you contacted your bank on this?

before i contact the bank - i was hoping to get ye're advice!!!!!:P

Corkblowin

Look at it like when you go to work - you get paid on Friday, after you've done your weeks work - not on Monday before you start. Same for the mortgage, you build to a stage, get it certified, and the bank releases the money. The builder gives you credit for his work to that point.

Seeing that the banks don't give 100% mortgages anymore there should be some cash for certain elements available in any event. Do you have a builder or are you doing it yourself?

JD6910

Corkblowin wrote: »

Look at it like when you go to work - you get paid on Friday, after you've done your weeks work - not on Monday before you start. Same for the mortgage, you build to a stage, get it certified, and the bank releases the money. The builder gives you credit for his work to that point.

Seeing that the banks don't give 100% mortgages anymore there should be some cash for certain elements available in any event. Do you have a builder or are you doing it yourself?

this is a self build project. bank looking for me to spend my own funds first - when those funds are gone - will the bank reimburse me to allow the next stage progress?

muffler

JD6910 wrote: »

lets say i spend €60K and get her up to FFL. will the banks therefore according to you reimburse me €60K to allow me drive on to the next stage??

You will not get the full €60k but most likely 92% of that amount which would work out at €55,200. When quoting 92% I'm thinking of Bank of Ireland as thats their normal mortgage drawdown percentages.

Different banks will have different conditions in relation to mortgages so you need to discuss this with them