Interested in building a new home?
Building a new home can be complicated and there are a number of different financing options available to you.
If you are dealing with a major builder, typically they will carry the financing for you throughout construction and you simply need a completion mortgage once the home is complete. If the builder is not willing to carry the financing you may be required to acquire a progress draw mortgage. A progress draw mortgage will advance money in intervals as the house is being built.
There are two mortgage financing options for new construction:
Construction Draw Mortgage
If you have purchased your new home through a residential home builder and they only require funds when the house is 100% complete, then you simply require a completion mortgage. Most major builders will offer this option and it makes the home building process much easier for you the buyer! The process is simple, we will do a tradition pre-approval for you up front, you pay your deposit to the builder to secure the contract, and then upon completion we put in place a regular mortgage for you.
An approval can be completed many months in advance and interst rates can be locked in for 4-6 months depending on the lender and term we choose.
Construction Draw Mortgage
A draw mortgage is a little more complicated to setup and manage throughout the home building process. This type of mortgage is fully approved up front and money is advanced at various stages of completion during the construction of your new home.
Qualification and Guidelines
New construction must conform to the National Building Code and the latest edition of Residential Standards Canada - or the applicable municipal and provincial building codes.
Builder/contractor must meet general profitability and credit worthiness as per lender's guidelines.
Builder/contractor must be a member of the New Home Warranty Program (NHWP).
Regular requirements related to income, down payment and credit worthiness apply.
Progress Draw Schedule
Draw #1 - Optional First Advance Prior to Start of Construction - 65% of the lending value of the vacant land
Draw #1 - Optional 15% First Advance - At 15% complete; Excavation and foundation complete
Draw #2 - 40% Complete; Property is framed, roof on, windows and doors installed, lock up stage.
Draw #3 - 65% Complete; Plumbing and wiring started, plaster/drywall is complete, furnace installed.
Draw #4 - 85% Complete; Kitchen cupboards installed, bathroom completed, doors have been hung, etc.
Draw #5 - 100% Complete; Advanced upon taking possession.
An inspection is required at each stage of financing to confirm the work has been completed before advancing the next draw.
The first step to acquiring a construction or completion mortgage is to complete our online mortgage application. Once you complete this form one of our local Regina mortgage brokers will contact you to discuss your new home purchase and decide on the best product options for you!