Progress Payment Build Drawdown Calculator NZ

This calculator estimates the interest you pay during a house build in New Zealand while the bank draws down your loan in progress payments, a cost first-time builders almost always underestimate. When you build, the lender does not hand over the whole loan at once. Instead it releases money in stages as the work is completed, typically at deposit, foundations, frame and closed-in, fit-out and completion, paying the builder each time. You pay interest only on the amount drawn down so far, which means your interest bill starts small and grows steadily as the build progresses and more of the loan is advanced. Because the drawn balance climbs over the build, the average amount you are paying interest on is roughly half the total cost by the time the house is finished. You enter the total build cost, how many months the build will take, your interest rate, and the average proportion of the loan drawn across the build, and the calculator estimates the total interest you will pay during construction and the rough monthly cost. Use it to budget for the often-forgotten financing cost on top of the build price, and to see how much a delay or a higher rate adds. This is an estimate only, not financial advice; your lender's actual drawdown schedule will differ.

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Total build cost

Build length (months)

Interest rate

Average drawn over build

$15,000

estimated interest paid during the build

Average balance$250,000

Roughly per month$1,667

Interest is only on the amount drawn down so far; the balance grows over the build. Your lender's drawdown schedule will differ. Estimate only.

How it works

The average balance you pay interest on is the total build cost times the average drawn percentage, which defaults to 50 percent because the drawn loan rises steadily from nothing to the full amount. The build interest is that average balance times the interest rate times the build length in years (months divided by 12). Dividing by the months gives the rough monthly cost.

Worked example

A 500,000 dollar build over 9 months at 8 percent, averaging 50 percent drawn, means interest on an average balance of about 250,000 dollars for three-quarters of a year, roughly 15,000 dollars in total, or about 1,667 dollars a month.

Related calculators

Section Plus Build Total Cost: full budget.
Build Cost per Square Metre Calculator: build cost.
Turnkey vs Build Contract: contract type.
Mortgage Repayment: repayments after completion.

Frequently asked questions

How do progress payments work on a build?

The bank releases your build loan in stages as work is completed, such as at foundations, closed-in, and completion. You pay interest only on the amount drawn down so far, so your interest bill starts small and grows as the build progresses.

Why do I pay interest during the build?

Once money is drawn down to pay the builder, it is borrowed and accrues interest, usually on an interest-only basis during construction. Because the balance rises over the build, the average amount you pay interest on is roughly half the total by the end.

How can I reduce build interest?

A shorter build, a lower rate, and using your own cash for early stages all cut the interest. Delays are costly because every extra month adds interest on a large drawn balance, so keeping the build on schedule matters.