How to Keep Progress Payments and Cost Overruns Tight in an Alexandria Reno

Renovation progress payments in Alexandria work best when three things are locked in before demolition: a clear payment schedule, a realistic contingency buffer, and written rules with your lender for handling variations and cost overruns.

If you’re renovating a terrace or apartment locally, treat the finance like a mini development: structure the loan, the contract and your buffers so you can finish the job even if prices jump or the bank gets nervous.

Lock in your payment schedule and buffers before the first wall comes down.

1. How progress payments actually work on an Alexandria renovation

For anything beyond cosmetic work, your lender will usually treat the job as a construction or major-renovation facility.

1.1 Typical progress payment stages

Every lender has its own template, but for Inner South renovations you’ll often see:

• Deposit – 5–10% on contract signing (your cash).
• Base / demolition / strip-out – after structural work is underway.
• Frame / services rough-in – walls, plumbing, electrical.
• Lock-up – doors/windows in, weatherproof.
• Fixing / fit-off – kitchens, bathrooms, joinery.
• Practical completion – final payment after inspection.

The bank usually won’t hand your builder the money directly. Instead, they:

1. Receive the builder’s invoice for a stage.
2. May order a valuer or quantity surveyor (QS) inspection.
3. Release funds to your loan, then to you or the builder.

1.2 QS reports and valuations during a renovation

On tighter deals, the bank relies on QS or valuation reports to confirm:

• Percentage of work complete vs contract.
• Whether contingency is being used sensibly.
• Whether the “on-completion” value still stacks up.

If you’re self-employed or using alt‑doc funding (see /insights/alexandria-alt-doc-bank-statements-bas-safe-usage), this third-party sign-off becomes even more important because your income profile already makes the bank nervous.

2. Building a proper renovation buffer in today’s cost environment

Construction input costs in Australia have risen sharply in recent years (ABS Producer Price Index, June 2026). For Alexandria projects, that means a thin contingency is a real risk, not a nice-to-have.

2.1 Separate buffers: you vs the build

Borrowers regularly mix their life savings with renovation money. That’s how people end up with a half-finished shell and no cash.

Use two distinct buffers (refining the approach from Rose Bay in /insights/managing-progress-payments-cost-overruns-rose-bay-renovation):

1. Personal buffer – 6–12 months of stressed living costs plus all loan repayments, in cash or offset.
2. Renovation contingency – typically 10–20% of the build cost, separate account or loan split.

Keeping contingency in its own account or split helps stop you “accidentally” spending it on tap upgrades instead of genuine surprises.

2.2 How big should your Alexandria reno contingency be?

These are indicative ranges only, but anything below 10% in the current market is asking for trouble.