One of the most exciting decisions that people make when moving is having a home built. There are many intricate steps involved with taking your home from blueprints to the final product. That’s what makes finding construction mortgages in Alberta that are stress-free so important: you have enough stress with the design and building of the home, so you shouldn’t have to put up with difficulties from the financing process.
Construction Mortgages in Alberta
There are few different ways that our clients in Calgary, Edmonton and other areas in Alberta have structured their construction loans. In some situations, the customer hires a registered builder to take care of the construction process, and the builder needs financing draws. In this case, you’d take out a completion mortgage or a progress draw (where available). Some customers want to serve as their own general contractor and bring in subcontractors to do the work. In this case, you’d have the same two mortgage options. If you’re buying a home that a builder is constructing with his own money, but you don’t need the funds until the home is finished, then you’d be looking at a completion mortgage as well.
Whether you’re looking to build in Banff, Medicine Hat, Lloydminster or anywhere else in Alberta, one of your options is a completion mortgage. This means that you are completing your purchase or construction through a residential home builder, and you don’t have to have the loan funded until the house is 100% finished. In some cases, the builder requires a small deposit up front, but in either event, this is simply a regular mortgage.
Here’s a typical example. You put in an offer to buy a house through a builder. The total cost is $750,000, and the home will be ready in 12 months. You might need to pay $2,500 or a similar deposit with your offer, and then $35,000 more once your financing condition is met, requiring a mortgage of $712,500 on your closing date. Typically, customers make those first two payments out of their own resources (or they take out a different kind of loan). The larger construction mortgage is just a single advance loan and works just like a typical residential mortgage.
This is a different type of loan that involves advancing different amounts of the money as the house is undergoing construction. Some lenders offer this, while others do not, and some only offer them in certain areas. This is an area with which Amansad Financial can help you if you’re negotiating terms with a specific builder. In this scenario, the funds go to the builder typically at three intervals: 35%, 65% and 100% completion. If you’re also buying the land, you may also have to have a separate land draw as part of the loan. If you have a progress draw mortgage, a solicitor has to be involved with the paperwork.
Are you considering building a new home? Then talk to our construction mortgage specialists at Amansad Financial today.