We received pre-approval for our construction loan a month or so ago. The loan represents 90% of the cost of the house build.
Following pre-approval we signed the contract to build and at the same time paid 5% of the contract value as deposit to the builder.
We've now received final approval and will be signing the loan offer next week.
My question is this:
What will happen to the 5% cash we have already paid to the builder?
1/ Will the bank reduce our home loan by this amount?
2/ Will the bank reimburse us once building commences?
3/ Will the builder just draw down the cost of the construction LESS the deposit paid, in stage payments over the course of the loan, meaning that will have some 'leftover' at the end?
I'm just worried that the cash we'd sort of hoped to keep to one side to pay for finishing (turf, electricals etc) has now gone.
Having not done this before, I'm a little confused as you can probably tell!