Construction finance: control the invoices before consolidating the loan
A building loan and a long-term mortgage have different timing and cash-flow jobs. Model progress payments, delays and the final conversion.
The approved ceiling is not money already spent
Building a home creates payments before the finished property can be occupied. A construction credit typically serves this phase, while a mortgage finances the completed or progressively consolidated property over a longer term. UBS's current description, checked alongside FINMA material on 14 October 2026, distinguishes progressive drawdowns from long-term funding. Your lender's actual agreement controls the details. Start with a dated cost plan: land, construction, professional fees, financing charges and contingency. The amount approved by a bank is not a promise that any overrun will also be financed or that an unfinished project already has its forecast final value.
Make each payment a controlled decision
Clarify who checks the work, approves invoices and sends payment instructions. Keep changes to the project in a written variation log with price and timing effects. A lender paying an invoice does not substitute for your architect's technical acceptance or resolve contractual disputes with a contractor. Track committed costs as well as paid costs, so orders not yet invoiced do not disappear from the forecast. Ask how your own funds are used and what proof is required for further drawdowns. Keep a reserve outside amounts already committed; using every available franc early reduces flexibility when an unexpected bill arrives.
A hypothetical drawdown calculation
Suppose a CHF 600,000 construction-credit facility has an average drawn balance of CHF 200,000 for six months. At an entirely illustrative annual rate of 3%, simple interest for that period would be CHF 3,000: 200,000 multiplied by 3% multiplied by one half. This is not a current quoted rate and excludes fees, daily balance changes and contractual calculation conventions. Charging 3% on the full ceiling would overstate this simplified example. Conversely, a delay or faster drawdown can increase the actual cost. Model monthly balances and add financing expenses to the project budget instead of treating them as invisible overhead.
Consolidation trades flexibility for certainty
Converting construction borrowing into a mortgage, sometimes in stages, changes the funding profile. Earlier consolidation can give more certainty over a portion of the debt, but may reduce flexibility if construction timing or the sale of another property changes. Waiting leaves more exposure to the agreed construction-credit terms. Ask what happens if completion is delayed, the final valuation differs or the total budget increases. Compare written conversion conditions, not only an advertised mortgage rate. Do not select maturities or commit to a fixed period solely because a builder forecasts a particular handover date; the forecast needs a contingency scenario.
The monthly dashboard that helps
Use one sheet showing original budget, approved changes, commitments, paid invoices, remaining funding and forecast completion. Review it with the responsible professional at each milestone. Obtain written answers on conversion dates, fees, guarantees and how disputed invoices are handled. Separately verify construction insurance and contractual protections; the loan is not an insurance solution. Before moving in, reconcile final invoices, the credit balance and the mortgage agreement. A well-controlled payment trail makes problems visible early, although it cannot guarantee a contractor's performance, completion on time or lender approval for every later change.
Sources and further reading
Original Clearwise analysis. External reporting provides context; rules and contract terms must be verified with the competent authority or provider. Some press articles may require a subscription.
Apply this to your situation
Compare your actual documents and clarify what matters before making a commitment.
Request a free consultationGeneral guidance, not a binding quote or personalised legal, tax or investment advice. Examples are hypothetical and results are not guaranteed.
