Financing your renovation: draw schedules and lender inspections

A financed renovation adds a second set of milestones to track — the lender's — alongside your own. They are related but not identical, and understanding how draws work is what keeps cash flowing and the project moving.

Most stalled renovations we are called into are not stalled for construction reasons. They are stalled because a draw did not clear, the trades were not paid, and the crew moved to another job while everyone waited for an inspection to be rebooked.

Rather than handing over the full loan at closing, lenders release financing in stages tied to completed work. Each stage — a draw — is requested by the borrower, verified by an inspection or an appraiser's visit, and then funded.

The schedule of those stages is agreed before construction, and it is worth negotiating properly rather than accepting a template. A draw schedule that does not match how the work will actually be sequenced guarantees a mismatch later: you will be asking for money against work the schedule assumed would be finished in a different order.

A draw request that does not match completed, inspected work gets delayed. That delay reaches the trades, who are being asked to keep working on the promise of a payment that has not arrived, and the ones with other options take them.

The second common failure is documentation. Lenders typically want lien waivers from the trades paid in the last draw before releasing the next one. If that paperwork is collected reactively, every draw takes an extra week that nobody scheduled.

The third is simply notice. An inspector who needs a week's notice and gets two days' is not being difficult — but the project pays for it either way.

We build the construction schedule around the draw schedule rather than the other way around. Where a draw is tied to a milestone, that milestone gets protected in the sequence — we do not let it slip behind two other tasks that could have run later.

Progress gets documented the way lenders expect it documented: dated photographs, a written statement of what is complete against the schedule of values, and invoices that map to the line items in the budget rather than to a lump sum.

And inspections are booked ahead of the draw request rather than after it, so financing keeps pace with construction instead of trailing a fortnight behind it.

Most construction lending holds back a percentage of each draw — retainage — released at completion. That is normal and it exists for a reason, but it has two practical consequences worth planning for.

First, the trades are also carrying that hold, so their cash flow depends on the project finishing cleanly. Second, the final draw is usually tied to sign-off or a certificate, which means closeout paperwork has a direct cash consequence. A punch list that drags for two months is not just an annoyance; it is money nobody has been paid.

If a lender is funding your project, the useful preparation happens before mobilisation, not at the first draw.