Our guide on Construction Financing Mortgages in Canada!
Building a new home or undertaking a significant renovation can be an exciting but stressful time, especially when it comes to financing the project. That’s where construction financing mortgages come in.
What is a Construction Financing Mortgage?
A construction financing mortgage is a type of mortgage that provides funding for the construction of a new home or significant renovation project.
Unlike a traditional mortgage, where the full amount is given upfront, construction financing mortgages are released in stages as the construction progresses. The lender will typically release the funds in instalments, known as draws, after specific milestones are met.
How Does a Construction Financing Mortgage Work?
Construction financing mortgages work differently than traditional mortgages. Instead of a lump sum payment, the funds are disbursed in installments based on the project’s progress. This method of payment is called progress draws, and they are typically paid out in three to four installments:
- The first draw is issued at the start of the project to cover the initial expenses, such as purchasing land or preparing the site.
- The second draw is paid once the foundation is complete and inspected.
- The third draw is paid once the framing, wiring, and plumbing are in place and inspected.
- The final draw is paid once the project is complete and the final inspection has been passed.
It’s essential to work with a lender who has experience with construction financing mortgages. They can help guide you through the process, ensure that the draws are paid out correctly, and that the project is on track.
What Are the Benefits of a Construction Financing Mortgage?
A construction financing mortgage provides many benefits to those who are building a new home or undertaking a significant renovation project:
Construction financing mortgages are flexible and can be customized to suit the needs of your project. The draw schedule can be adjusted to accommodate your specific needs, and the loan amount can be tailored to fit your budget.
Unlike traditional mortgages, where the full amount is given upfront, construction financing mortgages only require payments on the funds that have been disbursed.
During the construction period, you only have to pay interest on the funds that have been disbursed. This can help to reduce your monthly payments and free up funds to be used elsewhere.
With a construction financing mortgage, you have greater control over the construction process. You can ensure that the project is completed to your specifications and that the quality of the work is up to your standards.
Construction financing mortgages are an excellent option for those who are building a new home or undertaking a significant renovation project. They provide flexibility, lower payments, interest-only payments during the construction period, and increased control over the construction process. If you’re considering building a new home or undertaking a significant renovation project, contact us today to learn more about construction financing mortgages and how we can help you finance your project.
We Offer A Range of Solutions For All Your Second Mortgages Needs!
A home equity line of credit or HELOC is a line of credit taken out by a borrower to access the equity in their home. The amount you can access is based on the amount of available equity in your home, which is determined by subtracting the appraised value of your home relative to any existing mortgages. The more equity you have available, the larger the line of credit amount you can qualify for. Whatever the reason you have is for needing to access your equity, HELOC loans are a great solution that allow you to access equity with flexible terms and payment options.
Why Choose Burke Financial
At Burke Financial, we specialize in communicating with lenders on behalf of our clients and delivering the best techniques and resources to combat a Power of Sale in Ontario. When it comes to protecting your home and your family, we leave no stone unturned. Our Mortgage brokers are available on-hand to put a stop to this process and ensure you remain in your home.
We are a customer service leader, and we’re committed to creating a positive and stress-free experience for our clients. Your home is an essential part of your story, and you deserve to continue writing.
Don’t stress over losing your home. Let the experts help. Get in touch with Burke Financial today.
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