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Mortgage Meister has a variety of mortgage solutions when it comes to construction and renovation projects.
- New Construction
- Home Renovations
- Investment Properties
- Home Additions/Structural Improvements
If you’re hoping to construct a custom-built home in the Greater Toronto Area to suit your personal tastes and lifestyle you will likely be interested in obtaining information on construction mortgages. At www.mortgagemeister.com, we will be glad to support you every step of the way when it comes to acquiring a construction mortgage.
We can help homeowners design their plans as well as arrange a mortgage, managing the costs, obtain a building permit and hire a general contractor. Once you’ve obtained a construction mortgage you’ll be able to cost to purchase the lot you want and begin working on your dream home. Our team of professional mortgage brokers will make sure the process runs as smoothly as possible with no complications.
There are three basic types of mortgages available for financing new homes. If you’re going to hire a contractor to erect the home you’ll need to provide them with financing draws. This is known as a progress draw or completion mortgage.
If you plan on acting as your own builder or contractor you’ll likely be hiring trades workers to carry out the work. Your construction mortgage options for this process are also a progress draw or completion mortgage
If you’re aiming to hire a builder to construct the house with their money you’ll need to have the funds available to them once the home has been completed. In this case, you’ll need to acquire a completion mortgage for the newly-constructed home.
With a completion mortgage, you will be hiring a home builder to complete the work and the funds aren’t needed until the construction has been 100 percent completed. However, in some cases, you may be asked to put down a deposit. For example, if the home costs $500,000 to build, you may need to pay $1,000 down with an offer to purchase and another $19,000 when the financing condition has been met. The remaining amount will be due when the building has been completed. This is basically known as a residential mortgage.
Progress Draw Mortgage
When it comes to a progress draw mortgage, the funding is released at intervals along the way when the home is being built. There are generally three separate draws while construction takes place. The first one comes when the home has been 35 per cent completed and this is followed by another at 65 per cent and the final draw is made when the home has been 100 per cent completed. If the homeowner is also buying the land, then a conventional land draw is often required.
In the case of a progress draw, a solicitor is needed. At each draw there needs to be a progress inspection report which will outline in detail the percentage of building completion. If this report is satisfactory then the funds will be released. It is the responsibility of the mortgage broker to order an inspection report from the appraiser. The report will be given to the mortgage lender and the draw will then be arranged. If the mortgage is insured the same process is followed and the lender will hand the inspection over to the CMHC. Interest will be charged on all of the funds that are advanced and are debited from the homebuyer’s account each month. The final draw is funded after the home has been completed and the final inspection has been approved. The final documents need to be signed by the homebuyer and the solicitor will deliver them to the mortgage lender. When it comes to mortgage insurance, please be aware that land draws aren’t available under the CMHC guidelines.
To be eligible for a builders’ mortgage, homebuyers will need to provide certain documentation. This includes written income and employment confirmation as well as proof of equity or down payment. All of the signed quotes, contracts, and documents of the agreements with the home builder will be needed. If you own the land you’ll need a copy of the title and if you plan on buying it you’ll need to show the offer of purchase. Other things required will be a full appraisal, certificate of fire insurance, and the specifications or plans for the home.
While construction mortgage may seem a little complicated to some potential homeowners, we’ll be able to simplify the process and fully explain it to you at www.mortgagemeister.com.Please feel free to contact us at your convenience for more information and expert assistance.