Happy Friday, everyone!
I’ve been looking for a property for quite some time. I recently received a rather interesting offer. It’s a new-build property that hasn’t started construction yet.
The project is great and the price is affordable. However, the payment scheme is a bit strange: 65% - 10% - 10% - 10% - 5%. From what I can see, the average initial payment is around 20%.
Based on people’s experience, what could justify such a large initial payment? I will, of course, talk to them directly 
The developer needs cash, or assumes buyers are desperate enough to put up with it?
The (only few) projects I had a closer look had those 20% upfront, with the rest being due at hand-over, or over time based on mile-stones achieved.
I’d have a very close look at the project and developer, because it indeed sounds rather unusual and you likely don’t have much in your hands if they fail, depending on the contract.
That what comes to my mind as well. Wondering how banks react to such ask…
Normal procedure.
Whereas most common situation is 20/80, paying according to a plan is not something, which is exotic.
I guess they are financing the land purchase with the buyers money, so they don’t have to take a loan.
Or as already suggested, if they can, why not?
Paying as you go isn’t, but starting with 65% upfront is, at least based on my limited experience. Just seems far away from when they actually have their own expenses, even if you include the property purchase, and we’re in a very low interest environment.
Ask them, assuming you already had some talks about mortgages.
I think it’s actually a good, additional sanity check. They’ll know more projects, payment plans etc. and also have an interest to only finance projects that go well.
Don’t skip your own due dilligence, but for once the bank might be on your side 
Or “to finance reliable people with liquidity” 
What I’m saying here that in the worst case a bank want their money back: probably they don’t care from whom they will get them.
imho it is not recommended to pay more than is build. „Zahlung nach Baufortschritt“ I think there is a SIA norm about it.
What are you doing if your contractual Partner goes bankrupt? Did they offer to insure your prepayment?
Well, I assume I will have huge problems. Anyway I’m going to ask all these question to the developer and hope to get answers.