Construction Mortgages

A construction mortgage is an excellent way for you to finance a custom home at a reduced cost.

 Four basics you need to know about construction mortgages:

1) You require a minimum down payment of 20%  (typically)

2) The mortgage funds will be advanced to you through “construction draws” or “progress advances” at various stages of your home building process

3) Your expected completion period ranges between 6 – 12 months (although longer periods can be considered if it makes sense)

4) Will you be the general contractor or will you hire a general contractor to build your home?

 What do you need prior to applying for your construction mortgage?

1) A mortgage pre-approval from your mortgage advisor

2) A construction budget including your lot purchase price (a work sheet can be provided)

3) The ability to carry your regular monthly household expenses/mortgage costs while you are building (and while you are making interest-only payments for the construction funds you will also be borrowing)

 What about permits?

1) You need a building permit from your municipality or district before you start construction

2) You need an occupancy permit before you can move into your new home (and before the bank will give you your final mortgage draw)

Through my mortgage broker’s network, I have access to institutional (banking) funds and private funds to assist with your construction project (residential or commercial)

For more specific details about construction mortgage please email me directly at paulhudson@riversidemortgage.ca