Buying or building a brand-new home can involve more than a traditional mortgage.
Whether you're purchasing a completed new build from a builder, buying a home that's still under construction or building on your own land, we'll help you understand the financing process, what you'll need along the way and which mortgage options may fit your project.
Before construction begins, the lender will typically need information about the land, building plans, construction budget, builder or contractor and expected project costs.
We'll review the project and your financial situation to determine which construction-financing options may be available and how much of your own money may be required.
The project gets underway, and you may need to use some of your own funds before or between mortgage advances depending on how the financing is structured.
As construction reaches required stages, the lender can advance portions of the mortgage. Inspections or appraisals may be required before each draw is released.
Once the home is complete and the lender's final requirements have been satisfied, the remaining funds are advanced and the financing moves into its completed mortgage structure.
One of the biggest differences with a progress-draw mortgage is timing.
Your builder may require payment at a different time than your lender is prepared to release the next draw. You may therefore need sufficient funds available to cover deposits, construction costs or timing gaps during the build.
We'll help you understand the draw struct
One of the biggest differences with a progress-draw mortgage is timing.
Your builder may require payment at a different time than your lender is prepared to release the next draw. You may therefore need sufficient funds available to cover deposits, construction costs or timing gaps during the build.
We'll help you understand the draw structure and your potential cash requirements before construction begins.
Don't wait until construction is underway to determine what the lender will require.
The earlier we can review your plans, budget, builder and financial position, the better we can identify potential financing issues before they become construction problems.
Even with careful planning, construction costs can change. Material prices, site conditions, upgrades, design changes and unexpected work can all push the final cost above the original budget.
Your mortgage approval, however, is based on the lender's approved financing structure and property valuation. You shouldn't assume additional mortgage funds will automatically be available if your project costs increase.
That upgraded kitchen, finished basement or change to the original plans might seem manageable on its own, but multiple changes can add up quickly.
Before making significant changes during construction, make sure you understand how they'll be paid for and whether they affect your financing.
Having a contingency built into your overall budget can give you room to deal with unexpected costs without putting the entire project under financial pressure.
Before construction begins, we'll help you look at:
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