Tag Archives: Questions

Construction Mortgages

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.

Bidding War: How To Survive

Do you have what it takes to win a bidding war?

Bidding wars occur when multiple offers are placed on a house. The seller can take any offer, depending on the best conditions proposed.

Do’s and Don’ts.

Be careful not to allow multiple bids steer you into a spiral of “ignorant bidding”. Do your financial homework and know your limits.

How to Determine if Your Bid Fits Your Budget

For argument’s sake, let’s imagine that you have a budget of $400,000.

Step One: Determine Your Monthly Payment

Let’s say the best five year variable closed low mortgage rate, amortized over 25 years is only 2.15 %, making your monthly low mortgage rate payments $1722.98. You may have the opportunity to place a bid as high as $465,000, calculating your monthly payments to be $2002.87.

Step Two: Determine Your Cost in the Long Run.

Using our Mortgage Calculator, you determine that with a $465,000 mortgage, at 2.15 %, you will be paying a total of $600,860.46 over your 25-year amortization period. However, with a $400,000 mortgage, you will be paying a total of $516,869.11 in interest payments. Use our mortgage calculator to calculate your payment schedule.

Step Three: Determine What You Can Afford.

Take a look at the possible shifts in interest rates.

For instance, if you decide to put an offer for $400,000 at 2.15 %, the rate could fluctuate. Those rates could raise to 3.75 %, calculating your monthly Canadian mortgage rate payments at $1987.84. With a $465,000 mortgage, you’re payments would increase to $2,310.87 per month. Planning for the future is a fundamental part of your mortgage strategy. Just because you can afford to place a high bid today (based on current interest rates) doesn’t mean that it is sustainable option for the long term.

Be sure you have a clear understanding of the maximum best mortgage rate you can afford BEFORE you start bidding. Remember to take both your current and future finances into consideration.

Bank Or Broker?

Who should you consult for your mortgage pre-approval?

Handle your mortgage like every other major purchase– that is, be sure you make the effort to compare rates and shop around. Not every Canadian mortgage rate is the same.

Bank Rates

When you visit a bank, it’s worth bearing in mind that their loan officers are paid to sell you their products. They will do whatever is required of them to keep you from considering other options.

Mortgage Broker

A mortgage broker is a self-employed agent who works only for you. They are qualified professionals that will help you find the most effective mortgage rate for your unique situation. They compare products from a variety of banks and specialty lenders, and arrange the best low mortgage rate for your needs. The broker works for you, the customer, and most importantly, they are completely free. The lenders pay brokers once they close the mortgage deal.

More Reasons Why Mortgage Brokers Are a Great Choice

  • Protect Your Credit Score
    • Brokers help to protect your credit rating by only pulling one credit report and using it for all lenders.
  • Give You Expert Information
  • Save You Money
    • A good mortgage broker can offer tips on how to save money on interest while managing to keep your low mortgage rate payments reasonably priced.

Bank vs. Broker

Which ones suits your needs better– bank or broker?

Types of Mortgages

There are a variety of mortgage products available on the market. Typically, mortgages fall under one of the following three categories, open, closed or convertible. A mortgage broker will help you understand the various options.

Make your mortgage hunt less troublesome– contact a mortgage broker today.

Property Investment Seminars – Scam or Helpful Resource?

So, you’re thinking about investing in real estate? Congratulations – property investment is a great way to diversify your portfolio and improve your financial footing during periods of economic uncertainty.

There’s just one problem – you don’t know where to start. Continue reading →

Location, Location, Location: What Are Home Hunters Really Looking For?

Location, location, location – it’s the most important aspect of any potential house hunt. But just what constitutes a good location? Whether you’re searching for a new home or thinking about putting your’s on the market, it pays to know what makes or breaks a prime location in your area.  Continue reading →