News from Canada's Mortgage Experts

Get the Facts – Episode #4

Construction Financing – How to Build Your Dream Home

Banks don’t like taking risk when it comes to people’s mortgages. This is particularly true if someone is looking for construction financing to build their dream home. A bank will avoid the risk associated with construction of a property because they don't have the knowledge, expertise, patience or policies in place to deal with this type of mortgage financing. Construction financing is different than the financing of a home purchase...but...like finding the right mortgage with the best rates, terms and conditions for the purchase of your home, doing the same for construction financing is possible with the right expert advice.

This is the first in a series of videos where we will follow the construction financing process from start to finish and walk thru the various stages as the home itself is being built. We will review some of the key points you should consider when looking for construction financing including:

1. What interest rate should I expect?
2. How many draws should you take to ensure your home is built on time and on budget?
3. What is the Construction Lean Act of Ontario?
4. Do you need a firm contractors budget?
5. What percentage of the home needs to be complete before a lender will provide me with a “take-out mortgage”?
6. What are the various stages that are considered by the lender when advancing funds?
7. Who will inspect and appraise the property?
8. What does my lender need to see so that they can be flexible in their fund advances so I can get the home built on time and on budget?