Construction Mortgages
Thinking about building? Here’s what you need to know.
Building a home is complicated; your low mortgage rate shouldn’t be.
Here’s a simplified look at the three different types of new construction financing available in Canada:
1) Builder/Contractor built home with your money: Customer has entered into an agreement with a registered builder to build their home.
- Mortgage Options: Completion Mortgage or Progress Draw
2) Self-Built Home: Customer wants to act as his or her own contractor.
- Mortgage Options: Completion Mortgage or Progress Draw
3) Builder built home with their money: Customer requires funds when the home is 100% complete.
- Mortgage Options: Completion Mortgage
Completion Mortgage
You have purchased / built your home through a residential homebuilder and only require Canadian mortgage rate funds when the house is complete.
Progress Draw Mortgage
Type of funding that is advanced in intervals.
Relevant Terms
- Solicitor: A progress draw requires a solicitor.
- Progress Inspection Report:Details progress prior to the advancement of the best mortgage rate funds.
- Interest on Draws/Advances: Interest is charged on all amounts advanced.
- Final Advance: Released upon final inspection confirming completion.
- Mortgage Insurance: Land draws are not available under CMHC guidelines.
Completion Stages
There are typically 3 stages to building a house:
- Roof Stage / Roof Tight – Approximately 35% complete.
- Intermediate / Lock Up – Approximately 65% complete.
- Final Occupancy / Completion – 100% complete
Required Documentation
- Written employment and income confirmation
- Proof of down payment or equity
- Copies of quotes
- Full appraisal
- Plans/ House specifications
- Fire insurance certificate
Need help hammering out the details of your construction mortgage? Contact FamilyLending.ca for expert advice.