Considering building a new home? Here is what you will need to understand.

Building a home is complex; your low mortgage rate shouldn’t be.

Let’s take a look at three different ways to finance your newly constructed home in Canada:

1. Builder/Contractor built a home with your money: Customer has made an agreement with a registered builder to construct their home.
   • Mortgage Options: Completion Mortgage or Progress Draw.
2. Self-Built Home: Customer would like to act as his/her own contractor.
   • Mortgage Options: Completion Mortgage or Progress Draw.
3. Builder constructed home with their money: Customer requests funds when the home is 100 % complete.
   • Mortgage Options: Completion Mortgage.

Completion Mortgage

After you have purchased or built your new home through a residential homebuilder you will then require Canadian mortgage rate funds when the house is finished.

Progress Draw Mortgage

This mortgage is a type of funding that is advanced in intervals.

Relevant Terms

• Solicitor: A progress draw requires a solicitor.
• Progress Inspection Report: Details progress before the advancement of the best mortgage rate funds.
  • Interest on Draws/Advances: Interest is charged on total amount advanced.
  • Final Advance: Released upon final inspection after verifying that the job is complete.
  • Mortgage Insurance: Land draws are not available under CMHC guidelines.

 

Completion Stages

There are generally 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

Do you need help working out the details of your construction mortgage? Contact FamilyLending.ca for expert advice.

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