Construction Mortgage

Construction

Building your dream home can be very rewarding, but can you afford it on your own? For some people, it makes more financial sense for them to build their dream home from scratch instead of turning an existing property into the house they want. How do you get the financing needed to create the custom home you’ve always wanted?

The answer: A construction mortgage.

What is a construction mortgage?

A construction mortgage is a special type of mortgage given to borrowers looking to finance the cost to purchase the lot to build on, as well as for the actual building of the home.

If you’ve already purchased land or it was gifted to you by a family member through inheritance or transfer, you are still entitled to a construction mortgage in order to build your new home. There are three types of construction financing available for those looking for this special kind of mortgage.

What are the three main types of construction mortgages available?

  1. Progress draw:

    This funding is given to those who have entered into an agreement with a registered builder with the purpose of having their home built. Funds are advanced in stages as the house is being constructed – 35%, 65% and 100%.

  2. Land draw:

    This is rare, but if you are purchasing the land your house is to be built on you may be eligible for a land draw. Funds are designated at the beginning specifically to purchase said land.

  3. Completion mortgage:

    This funding is for people that have built their home through a residential home builder and only require funds when the house is completed. Sometimes a deposit is required which is usually smaller than what you would need to offer for a down payment in a traditional mortgage.

Will a broker help me find the right type of mortgage for my construction needs?

Absolutely. Mortgage brokers do what they do best – find mortgages for every type of borrower. Additionally, a broker is responsible for sending in a progress inspection report to your appraiser if you’re on a progress draw program. When you work with a broker, you don’t have to do any heavy lifting (except for a box or two when you move into your newly built dream home).

No matter if you are looking to buy land for your dream house or you’re ready to start building, apply now to secure the specific type of funding needed for your project.

Back

Canada’s mortgage website

Your home is your most valuable asset. It is probably the single largest investment you will make in your lifetime. Your home is more than a place to rest your head and raise a family. Your home contains equity. It is a treasured resource and in some cases, can even be used as an ATM (aka cash back mortgages and HELOCs – don’t worry we’ll get there).

We All Need a Mortgage

Everyone who is looking to purchase a home will need a mortgage. But, what is a mortgage exactly and why do you need it? Besides being the term to describe a loan secured by real estate, a mortgage allows you to access funding to procure your dream home.

Mortgage Blog

All About Mortgage Refinancing

Refinancing, which means replacing your current mortgage with a new one, is usually done to help you, the borrower, get a better interest... Read More

Four Tips to Pay Off Your Mortgage...

For most people, their mortgage is the biggest loan they will ever take out. Read More

Getting A Mortgage When You Have...

Debt can be discouraging for those who want to buy a home and apply for a mortgage. Read More

How Are Mortgage Rates Set?

For many people, their house is the biggest investment they will ever make. Read More

100,000
people a month

Trust us to help them save money
and make better financial decisions.

Join the monthly newsletter for financial tips, news, and deals!

Mortgage Reminder

Enter Your Renewal Date:

Please select the Triangle and click the SUBMIT button.

Refresh
Northwood Mortgage

We're working harder for you