• Home
  • View Services
    • The Mortgage Pre-Approval Process
    • Home Equity Loans
    • Renewing Your Mortgage
    • Refinancing Your Home
    • Debt Consolidation
    • Reverse Mortgages
    • Commercial Mortgages
    • Construction Loan
    • Rental Property Purchasing
    • Purchase Plus Improvements
    • Creditor Life and Disability Insurance
  • Mortgage Planning
    • The Mortgage Pre-Approval Process
    • What Lenders Like
    • Mortgage Trends
    • Your Mortgage Payment
    • Specialty Mortgages
    • Your Mortgage Style
  • About Candice
  • Resources & Info
    • Calculators
    • Mortgage Reports & Guides
    • Mortgage Industry News
    • Understanding Assumable Mortgages
    • 10 Steps To Becoming A Homeowner
    • Mortgage FAQs
    • Glossary of Mortgage Terms
  • Contact

Calgary Mortgage Industry News

14
FEB
2014

Construction Loans Described: Candice Light Mortgage Broker in Calgary

Tags : Mortgage Broker Calgary
Posted By : Le Mike
Comments : 0

Couple in real-estate agency signing property loan contractWhy settle for someone else’s vision of the perfect home when you can build your own? Finding the right house isn’t always easy — especially in today’s competitive market. Building your own home might be the right choice for you.

Financing the building of a new home essentially requires two loans—a construction loan for the building process and a completion mortgage once the home is move-in ready. Fortunately, your mortgage broker in Calgary understands the procedures and will be there to assist you along the way.

Construction Loans Simplified: The Progress Draw

Obtaining financing to build a home is significantly different than getting a loan for an existing one because the risks to the lender are unusual. Because of this, loans are structured on the value of the home at each stage of construction, not the finished value. This is called “Cost to Complete Basis”.

Financing construction is done through what are referred to as progress draws. With this type of loan, payments are made to the builder at regular intervals during construction as specific benchmarks are met. Building that takes place before the first payment (or draw) is financed by your down payment. At each stage, completion must be verified by a licensed appraiser.

The draw points can vary by lender but should be relatively similar to the following:

  • First draw – made at around 16 per cent completion of the foundation
  • Second draw – made around 50 per cent of construction completion, generally when framing and installation of doors and windows is finished
  • Third draw – made at around 75 per cent of construction completion, or about when plumbing, electrical and drywall is finished
  • Fourth draw – made when construction is completed

Homebuyers will see higher interest rates for progress draws than those of a conventional mortgage – usually two to four per cent above prime – and this area is where the expertise of your Calgary  mortgage broker will come into play. Unlike a mortgage that can last for as much as 30 years, this loan only lasts during the construction period. If homebuyers don’t already own the lot where construction is occurring, they might also need a land draw. Those who do own the land can put that value toward their equity.

If you are planning a new home construction project, Mortgages By Candice will find you the very best construction loan rates and terms available.

Financing Your Finished Home 

After construction is finished, homebuyers will need a completion mortgage. This will pay the construction costs of the progress draw and then become similar to the type of mortgage you would have if you had purchased a home that was already built. While this might sound complicated, you can simplify the process by working with a mortgage broker in Calgary who understands the intricacies of construction loans.

Getting mortgage pre-approval is the beginning of your journey toward home ownership, and Mortgages by Candice will be there to guide you every step of the way. Candice will discuss processes like pre-approval and rate holds with you, and help you help you find terms suited to your individual financial needs. Today’s mortgage rates are nearly as low as they have ever been. Let your mortgage broker Calgary lock you in to the best possible rate before it’s too late.

In an already highly competitive market, listings of existing homes remain low, which makes finding the right one more challenging than ever before. Building a new home to meet your needs might be more within reach than you ever thought! Smart home buyers consult with an experienced broker to make sure they understand all their options. Mortgages by Candice offers a wealth of mortgage planning and financial services to help you meet your goals for tomorrow and beyond. Contact Candice today to learn how she can help you realize your vision and make your dream home a reality!

About the Author

Social Share

  • google-share

Leave a Reply Cancel reply

You must be logged in to post a comment.

Search My Site

Tags

Alberta Floods Real Estate Transaction Best Calgary Mortgage Rates Best Mortgage Rates Calgary Calgary Best Mortgage Rates Calgary Mortgage Calgary Mortgage Broker calgary mortgage brokers Calgary Mortgage Planning Calgary Mortgage Pre Approval Calgary Mortgage Rate Calgary Mortgage Rates Calgary Mortgage Renewals Calgary Mortgages Common Home Buyer Mistakes credit card secrets Current Mortgage Interest Rate Edmonton Mortgage Broker Edmonton Mortgage Rates high river mortgage broker high river mortgages How Much Should you Budget for Calgary Mortgage Cl Mortgage Broker Calgary mortgage broker high river Mortgage Broker Okotoks mortgage brokers calgary Mortgage brokers okotoks mortgage calgary Mortgage Okotoks Mortgage Planning Calgary mortgage pre-approval okotoks Mortgage Pre-payment Penalties Mortgage Pre Approval Mortgage Pre Approval Calgary Mortgage Rates Alberta Mortgage Rates Calgary mortgage rates okotoks mortgage renewal calgary mortgage renewal faqs mortgage renewal okotoks mortgages by candice okotoks mortgage Okotoks Mortgage Broker okotoks mortgages Refinancing Calgary Reverse Mortgages

Browse My Services

  • The Mortgage Pre-Approval Process
  • Home Equity Loans
  • Renewing Your Mortgage
  • Refinancing Your Home
  • Debt Consolidation
  • Reverse Mortgages
  • Commercial Mortgages
  • Construction Loan
  • Rental Property Purchasing
  • Purchase Plus Improvements
  • Creditor Life and Disability Insurance
twitter
facebook

Mortgage Planning

  • Mortgage Planning
  • The Mortgage Pre-Approval Process
  • What Lenders Like
  • Mortgage Trends
  • Your Mortgage Payment
  • Specialty Mortgages
  • Your Mortgage Style

Mortgage Industry News

A great place for helpful tips and information. Be sure to visit our blog!

Click Here

Meet Candice Light, AMP

My career started as a rental property owner with my husband and by planning financial strategies around investing in multiple properties. I became very knowledgeable about mortgages, and obtained my ...

Meet Candice

Frequently Asked Questions

What are Conventional Mortgages?

Mortgage FAQs

Contact Information

Candice Light, AMP
Mortgage Broker

Okotoks Office
105 Elizabeth Street
Okotoks, AB. T1S 1A8

Calgary Office
#890, 10201 Southport Road SW
Calgary AB, T2W 4X9

(P) 403-998-8561
(E) candice@mortgagesbycandice.ca

The Mortgage Group Logo
Copyright © 2014. Mortgages By Candice | Sitemap
Designed byEmphasize Design