Building your own home is an exciting and rewarding project. We’re here to help you understand the process of financing the construction of your new home so that you can get started with confidence and proceed with peace of mind.

You may have had some experience in obtaining a “normal” mortgage, but you will see that the construction mortgage is much more detailed, and recognized several milestones in the project that need to occur before funds are advanced.

Planning is the key to ensure a smooth project. Understanding the stages of construction that need to occur before the lender advances funds will help plan budget and cash flow requirements throughout the project.

Typically, when purchasing a normal home, the funds are advance in one lump sum.  Construction mortgages are generally advanced in 3 stages.  The Rough-in stage (35% complete); the Dry-wall stage (65% complete); and the Completed Stage (100% complete).

The Land
You will need to own the land, as the lender will generally put a first mortgage on it.

Servicing the Land
The land will need to be fully serviced, such as hydro, water, sewage and possibly gas.

Initial Costs to Expect
There will be out-of-pocket expenses such as Property Taxes, above services, building permits, Architect and Engineering fees, Realtor and Solicitor Fees, Appraisal, and Inspection costs.

Initial Build
You will be responsible for financing the first stage (35%) with your own money, and as the advances begin, this money will be used to finance the balance of the work.

Mortgage Payments
You will be required to make monthly mortgage payments after the first advance occurs, which is typically interest-only payments.

Budget for Cost Overruns
Unforeseen changes will occur. Maybe you want to make a change as a newer better feature became apparent, or just maybe an un-expected issue occurred. Set aside and additional 15% in your budget for when this occurs.