Dream of constructing your own home from ground-up? CMGS is here to realise your dreams. Construction Mortgage can be defined as a loan borrowed to finance the construction of a home in which the borrower pays only the interest during the construction period. Upon the completion of construction, the loan amount turns due and becomes a normal mortgage. During the progress of construction, the money is advanced in increments. The two parts of this loan are a loan towards the cost of construction and a mortgage on the constructed home. If you are confused about this scheduling of money, talk to Canada MGC experts.
To Construct or Buy Pre-Made?
Constructing your own home has many advantages. One good advantage of this kind of loan is that the borrowers have to apply only once and they will have only one loan closing. Though building a home is not an easy task, borrowers must ensure that the mortgage is easy at least. The different kinds of construction mortgages fall under three major categories allowing the borrowers to get their houses built through a contractor or build the homes by themselves or buy a constructed house.
- Letting the builder/contractor build the home with the borrower’s money is quiet popular. In this type, the customer enters into an agreement with a registered builder who will require financing draws. The two mortgage options under this category include completion mortgage or progress draw.
- Self-Built Home Plan: The customers wish to act as their own contractors apply here! They can complete the job by hiring sub-trades. Again, the two options under this plan are completion mortgage and progress draw.
- Third type includes the plan where the builder has built the home with his or her own money and needs funds upon completion of the project. This can be described as mortgages on newly built homes, town homes and condominiums. Completion mortgage is easier to avail.
Completion Mortgage is in other words the regular kind of mortgage where the customer has entirely borne the expenses of building or purchasing a home through a residential or home builder. Now, he needs funds only when the house is fully complete. For instance, if the cost of the house is $400,000 and it will be ready in 12 months, then the down payments are due in line as $1,000 upon purchase agreement, $19,000 after satisfying the financing conditions and $380,000 on closing date, i.e. after 12 months. In this example, the customers will spend $20,000 from their pockets and will seek a mortgage loan only upon closing. This can be called as a single advance mortgage and it is very much similar to the conventional residential mortgage.
Let Canada MGC be your Guiding Light for Construction Mortgage
Our construction mortgage experts have specialized in Progress Draw Mortgage besides other mortgage products. Here, the borrower is advanced in intervals during the building of the home. Usually, it is given in three draws at 35%, 65% and 100% completion. A land draw is necessary if the borrower is purchasing the land also. In every stage of completion, the claim should be made along with the appraiser’s percentage completion inspection report.
Most money lenders will not sanction the final advance unless the project is fully completed. This process is applicable even under cases where the mortgage is insured. But this is not so with Canada MGC. Usually, the broker order for the inspection report and then submits it to the lender who will manage the draws after receiving it. Call our construction mortgage professionals to get a smooth credit line flowing for constructing the home of your dreams.