Mortgage for a build and renovation: how staged drawdown works
When you build or renovate, you don't get the money all at once. The bank sends it in stages against the budget, and you only pay interest on what you've drawn. It's a different mechanism from buying a finished flat, and it needs different preparation.
How does the money arrive?
In stages, as the work progresses. Banks call this staged or advance drawdown.
There are two modes, and it's worth knowing which one you have. With advance drawdown, the bank sends you money ahead of time against the budget and schedule, and you don't provide individual invoices. With drawdown against invoices, you pay first and the bank then reimburses the proven expenses.
Advance drawdown is more convenient for someone building by their own labour who doesn't have a company invoice for everything. In exchange, the bank wants a more detailed budget and ongoing checks.
Komerční banka describes it like this: the bank sends funds "according to the set budget and repayment schedule", and the advantage is that "you don't have to provide individual invoices for specific work". Checked on 21 September 2026.
Do I pay interest on the whole mortgage, even when I've only drawn a tenth of it?
No. Interest is calculated only on the amount drawn. As long as you've taken a tenth, you pay interest on a tenth.
During drawdown, you usually repay interest only, and you move to repaying the principal only once the full amount has been drawn. The repayment during construction is therefore lower than the final one, which helps if you're also paying rent at the same time.
And the thing that surprises people most: you don't have to draw the rest. When the build comes out cheaper, you simply don't take the remaining part and repay only what you used. Česká spořitelna states this directly: "you don't have to draw 20% of a construction mortgage and nothing happens".
What do you have to provide?
Three documents on top of an ordinary mortgage: project documentation, an itemised budget and a construction schedule. On top of that, a building permit, if the build needs one.
The budget is the most important of these and the one most often underrated. The bank's surveyor first assesses from it whether the build is feasible at all for that money, and uses it during the work to check whether the build is on track. A budget with a margin passes more easily than one stretched to the limit.
For a renovation it's less strict, but the logic is the same: the bank wants to know what will be done with its money and how much that's meant to cost.
What does the bank calculate how much it will lend from?
From the value after completion, not the current state. That's the key difference from buying compared to building.
The surveyor sets the property's future value and the bank calculates LTV from it. The land is counted into the value too, so if you've already paid for it, that improves your starting position. How the valuation works is covered on our page Property valuation.
Česká spořitelna states that the maximum amount lent is based on the "future value of the property" and that "the land is also counted into the value of the property".
What happens after completion?
The surveyor comes again. They check that the money was used according to the budget and that the build matches what was planned.
Only then does the mortgage switch over into the ordinary mode and you start repaying the principal. The bank usually also wants proof the build is finished, meaning the occupancy approval or today's equivalent of it, depending on the type of build.
A practical piece of advice to close with: keep a margin in the budget and allow for drawdown and checks taking some time. A tight schedule is the most common reason a construction mortgage drags on.
Frequently asked questions
Can I get a mortgage for land without a build as well?
Yes, banks also finance the purchase of land on its own, but usually with a lower LTV than for a flat or a house. Land is harder to sell on, so the bank carries more risk and wants you to put in more of your own money. If you start building on the land straight away, both are covered by one mortgage.
Can I build using my own labour?
Yes. Advance drawdown exists exactly for this: the bank sends money according to the budget and you don't provide invoices for every item. In exchange it wants a more detailed budget and ongoing checks by the surveyor.
What if the budget doesn't hold and the work gets more expensive?
Increasing a mortgage that is already approved is possible, but it is a new application and a new assessment, not a formality. That is why it pays to build a margin into the budget in advance. An undrawn part can still be drawn once there is somewhere to put it under the original budget.
Can the mortgage also pay for fittings?
Banks often recognise a fitted kitchen or built-in wardrobes as part of the build, but usually not freestanding furniture and appliances. The line differs from bank to bank, and what decides it is what is in the budget and what the surveyor accepts.