Although planning to build your dream home requires a more complicated process, the end result will make it all worth it. To help you better understand the process, see our step-by-step guide to getting a construction mortgage:
Calculate your costs – Determine the project costs and create your home building budget. Consider the vacant land price, labour costs, material costs, and more.
Determine your property’s value – Get an appraisal to determine your property’s end value. You will need to provide lenders with this “as complete” appraised value.
Apply for a mortgage – Shop for lenders and apply for a construction mortgage. Lenders will request for financial information, like debt and income; and project information, like blueprints, construction plans, builder contracts, and proof-of-sale of the lot.
Receive your draws – Progress through the construction stages and receive your construction mortgage funds in installments.
Complete construction – Finish the construction process and receive the remainder of your mortgage funds.
Get your payout statement – Request for a payout statement, or discharge statement, from your lender. This document will indicate the outstanding balance on your construction mortgage.
Switch to a takeout mortgage – Apply for a standard mortgage once the construction of your home is complete. The funds are then used to pay off the construction mortgage lender.