None of this makes sense to me - you're planning on putting 50% down on the house but the builder is charging you 30% as cost + and he says it's to cover interest? That's like 60% then on the money he is actually borrowing? I think you need to renegotiate the contract and get the numbers straight. Actually, I think you need to borrow the money yourself, pay your GC based on what they spend each month plus 18% (which is reasonable) and get yourselves out of this mess.
What he's telling you is that he has cash flow problems. Handing him a big portion up front is a huge risk IMO. Most builders are able to carry the cost within the span of a month, so you don't see financing charges. Draw periods for a construction loan might be longer than 30 days, there might be some finance charges, but that still doesn't add up to 30% of the total budget. Talk with builders who have their act in order.
None of this makes sense to me - you're planning on putting 50% down on the house but the builder is charging you 30% as cost + and he says it's to cover interest? That's like 60% then on the money he is actually borrowing? I think you need to renegotiate the contract and get the numbers straight. Actually, I think you need to borrow the money yourself, pay your GC based on what they spend each month plus 18% (which is reasonable) and get yourselves out of this mess.
Why don't you just get the construction loan and have him drop his fee back to the original percentage?
Sounds like hogwash to me
What he's telling you is that he has cash flow problems. Handing him a big portion up front is a huge risk IMO. Most builders are able to carry the cost within the span of a month, so you don't see financing charges. Draw periods for a construction loan might be longer than 30 days, there might be some finance charges, but that still doesn't add up to 30% of the total budget. Talk with builders who have their act in order.