FINANCING
Let’s learn about a lesser known way to build a home
CONSTRUCTION DRAW MORTGAGE
A construction mortgage, also known as a builder’s mortgage, allows you to withdraw the entire loan amount at predetermined stages of home construction. Allow us to explain.
Construction mortgages are granted on the basis of progress payments. The total amount you need to borrow to finish your construction is given to you in stages, also known as “draws,” as you complete various levels of completion.
This option is preferred by Luxxify Builders.
You will start off with providing updated information about the down payment amount, your income, monthly obligations, etc.
This will include the documents like proof of income, down payment confirmation, etc.
The lender and builder will agree on a withdrawal schedule that will allow the builder and contractor to draw funds from the loan at various stages of construction.
THINGS TO KEEP IN MIND
A lender will need to know everything about the home before they will approve a Construction Loan. You will need to provide blueprints, material and labour costs, and all other costs associated with the construction process.
The bank will also need to know the construction timeline, including when the home will be ready for the owner’s possession and occupancy.
The draw mortgage will be converted into a standard mortgage once the house is finished. Most of the time, there is no need to reapply for the mortgage because the same application can be converted into a standard mortgage, saving you time and money. However, we recommend consulting with a mortgage broker.