Construction Draw Interest Calculator

Work out construction draw interest instantly with clear inputs, formula shown and shareable results.

About Construction Draw Interest Calculator

Interest during construction accrues on the drawn balance, not the whole facility, so the average outstanding balance is what matters. On an evenly spent programme that average is about half the facility, which is why interest during construction is usually roughly a quarter of the headline annual rate applied to the full amount.

Formula

Interest during construction

Interest = facility x average drawn share x annual rate x months / 12

Worked example

With the default values below, Construction Draw Interest Calculator returns Interest during construction of $1,650,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Total amount drawnminimum 0.01: 20,000,000
Annual interest rateaccepts 0.01–40 %: 11 %
Construction periodminimum 1 months: 18 months
Average balance drawnaccepts 1–100 %: 50 %

Results

Interest during construction: $1,650,000.00
Average outstanding balance: $10,000,000.00
Interest as share of the facility: 8.25% %
Average monthly interest: $91,666.67

Step by step

1Values used
2Interest during construction
3Interest during construction= 1,650,000.00
4Average outstanding balance= 10,000,000.00
5Interest as share of the facility= 8.25 %
6Average monthly interest= 91,666.67

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or fees or charges into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is the Construction Draw Interest figure worked out?

Interest = facility x average drawn share x annual rate x months / 12. Interest during construction accrues on the drawn balance, not the whole facility, so the average outstanding balance is what matters.

Should this interest be capitalised?

Accounting standards generally require interest directly attributable to constructing a qualifying asset to be capitalised into its cost rather than expensed.

What values do I need to enter?

This calculator takes 4 inputs: Total amount drawn, Annual interest rate, Construction period, Average balance drawn. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.