Construction Mortgages

Construction mortgages require more planning and paperwork than regular mortgages. In addition to standard income, credit, and down payment verification you will be asked to provide the following…a deed or contract for the lot, plans and blueprints, quotes for labour and materials, cost summary, construction permits, and an appraisal to determine end value. If you already own your lot, it will qualify as down payment. You should also have some money, or access to funds, to get you to the first draw stage.

With a regular residential mortgage proceeds are released in a single amount when ownership changes hands. The same is true if you contract a registered builder or developer to build your house and it includes the lot. However, if you buy or own your lot and hire a general contractor or a number of sub-contractors it is considered a self-build. In this case, the financing will involve a number of progress draws where the loan proceeds are given out in a series of advances at predetermined points in the construction process. If you are doing most of the work yourself, the lender will want to see that you have experience and expertise in the home construction industry.

If you have not worked in housing construction, or are not familiar with the process, you will need a general contractor or project co-ordinator to make sure the project follows the building plans and local building codes and stays on schedule and on budget. Atkinsion Home Building Centers in Hartington and Kingston have a great deal of expertise in this area and can recommend proven contractors and/or act as your project co-ordinator to guide you through the process. They can be reached at 613-372-2838 or on line at www.homehardwarekingston.ca .

Construction financing is more complex than regular financing and not all banks and lending institutions even offer this type of mortgage. It is important to talk to someone that understands this the process. We specialize in construction mortgages and can help you avoid common problems and costly mistakes often associated with this type of financing.