Unlike a traditional mortgage where you receive the money up front, with a Construction mortgage you receive payments with each construction milestone. Construction mortgages are given on a progress advanced basis. The stages are called “draws” and are outlined by the lender according to your various levels of completion. Most lenders will allow you to borrow up to 75% of your construction costs meaning you will need to come up with the other 25% out of your own resources. You will only start to pay interest on the draw as soon as it is disbursed.
A sample draw schedule would be as follows:
** The first draw is using the assumption that you already own the land. If you are purchasing vacant land, then the first draw would be up to 80% of the value of the vacant land. This percentage is based upon case dependent criteria.
**Each draw is dependent upon the lender’s appraisal of the completed work and is only given after the lender has approved the appraisal. This often includes an inspection fee which varies from lender to lender.
Once all the draws have been disbursed and the construction is complete, you will have the option to refinance into a new mortgage or pay back the loan in full.
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Getting a Residential Construction mortgage allows you to borrow money to construct your own home rather than buying a brand new home. You also save exorbitant costs in Land Transfer Tax and Realtor fees. In addition you get to design your dream home and don’t have to compromise on features and finishes.
As an example if you currently live in a $1.6M home in Toronto the cost to move into a new $2.1M home (not including increased monthly mortgage payments would be $182,950.00.
Land Transfer Tax on $2.1M would be $77,950.00 (Toronto LTT specific)
Realtor Fees on a purchase of $2.1M would be $105,000.00
Imagine taking that money, $182K + and using it towards building your dream home. Construction Financing is one of the best ways to add value to your existing property while staying in the location or neighborhood that you love.
At SafeBridge our access to over 63 different lenders sets us apart. With over 20+ years in the mortgage lending space our team of mortgage professionals is qualified to help you find a residential construction mortgage that suits your needs.
No two residential construction mortgages are alike and we pride ourselves in customized solutions that solve your unique challenges with regards to residential construction financing.
When you work with SafeBridge, our team of professionals take the time to understand your situation and come up with the perfect financing solution. It is always in your best interest to work with a company that will not only help you secure financing but also keep in mind your holistic financial goals and make sure they are all in alignment. As a company we help thousands of clients each year find the perfect financing solution to fit their needs. When it comes to residential construction mortgages our team of exceptional mortgage brokers will assist you with finding the perfect mortgage and financing terms.
Building your dream home can be both exciting and stressful all at the same time. At SafeBridge we strive to make this process as seamless as possible to ensure you can get the construction done on time and on budget.
Contact us today to see if you qualify for a Residential Construction Loan and have one of our mortgage agents walk you through the details.Apply Now
In order to qualify for a Residential Construction Loan you will need to get proper construction drawings and permits and submit them to the lender for approval. It is always wise to give yourself enough time to ensure all the details have been completed properly before submitting to the lender. Your mortgage agent can assist with this process.
Once all the draws have been disbursed and the construction is complete, you will have the option to refinance into a new mortgage or pay back the loan in full. You should speak with your mortgage advisor to see which option is best for you
Most lenders will lend up to 75% of the total cost of construction, leaving you with the additional 25%. It is always wise to budget extra money for additional fees that may occur and any delays in construction and plan accordingly with your mortgage agent.
Chris is a Co-Founder and Financial Advisor at SafeBridge Financial Group, the originators of Mortgage Centered Financial Planning, and is passionate about serving his clients and empowering the incredible team to “Be Better. Be Inspiring.” Prior to co-founding SafeBridge, Chris started his career as a Financial Advisor with Sun Life Financial, formerly Clarica Financial Services, and had the privilege of serving many clients financial needs for over a decade.
Over the last 20 years we’ve been successful in attracting over 60 various lenders that our clients can benefit from. SafeBridge has evolved over the years and has become a very successful company…. The education, that comes along with not just the mortgage agent side of things, but also on the insurance and the investments and the financial planning all comes together in one holistic approach.
Dena is a seasoned Mortgage Broker with 24 years experience in the financial industry. She started her career at Canada Trust as a part-time Teller while attending York University. During her 15 years with TD Canada Trust, Dena held various positions of increasing seniority. As a Senior Financial Advisor she gained knowledge in many disciplines in the banking and investment arena.
For several years Andre has worked in the Financial Planning and Mortgage Solutions field with Scotiabank. After experiencing success, and gaining a wide knowledge base in the banking world, he decided to leave the bank to join a Boutique Mortgage Brokerage, Safebridge Financial Group. Andre made the change so that he could offer clients a wider variety of mortgage options and lenders.
At SafeBridge we believe in experiencing growth together. We want to ensure that each of our agents is successful and feels a part of the SafeBridge team. We offer customized training, lender previews, team events and even team trips to build the strong culture of inclusion and support that so many of our agents enjoy.
We believe it is essential to hire and Partner with the right people. We are looking for the best and brightest in the Industry to join our Exclusive Group of Professionals. Our team consists of loyal top producing Agents that have demonstrated exceptional care for their clients and passion for the industry in which they serve. Our Mortgage Centered Financial Planning approach helps our team foster long lasting relationships, which brings a unique process to the mortgage business.
With over 20+ years in the Mortgage Industry, SafeBridge has built a solid reputation in the industry and is well respected by all major lending partners. SafeBridge has partnerships with over 10 insurance providers in Canada and has access to hundreds of mortgage products.