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Construction Mortgage in Toronto

How To Get Mortgage For Home Construction

Constructing your own home is exciting and one that many Toronto residents are undertaking. Why live in a home designed and built for another family with a different lifestyle when you can customize a home to your lifestyle?

So you got yourself into home construction, what are your options in terms of a mortgage? At Toronto Mortgage Brokerage we offer a number of different options for a construction mortgage. Whether you are a builder yourself, employing a contractor for building, or are a buyer of a new home there are unique solutions available for you. Building a custom home is a popular trend in Canada at the moment because it allows to include all the features and designs that reflect your personal tastes. Such projects require sufficient financing and preparation, however.

Documents That You Need To Apply For Construction Mortgage

Construction financing, when done properly, is a quick and efficient process. As a builder there are a number of documents that you need to obtain and provide. Examples include: building plans, specifications, proof of down payment, fire certificate and more. Our specialists will make sure that you are not missing anything that is needed and will save you many on the processes.

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Qualifying For A Construction Mortgage In Toronto

Qualifying for construction mortgage sometimes called a self-build mortgage is very different to qualifying for finance on an existing property. Mortgage providers will require a lot more information from you and you will have to make a bigger down payment on the property than on an existing home. This is typically anything from 25% to 30%.

When planning to construct your own home, you’ll have to work with the contractor to produce drawings, timelines and cost estimates before you approach the financial institution to seek funds.

Most lenders will want assurances that the construction will be completed in a certain timeframe. They may want proof that the builder is certified and has a portfolio of previously well-built homes.

Toronto financial institutions deem the mortgage risk of construction to be greater than that on an existing home and for this reason, they will finance the construction as it reaches various stages and will not part with the full funding until the construction is complete.

The institution will require

  • Proof of income
  • Credit history
  • Building plans and estimates

Types Of Construction Mortgage

In Canada, there are two types of construction mortgage available, a process-draw mortgage and a completion mortgage. If you have a completion mortgage transfer of the money will only take place upon completion of the construction or when you take occupation.
Because the funds are transferred on completion you can usually make changes to the mortgage up to thirty days before you take possession. This gives you the flexibility to ask for additional amounts if there are overruns.

On the other hand, during the completion time, your life’s circumstances could change and you may not qualify for the mortgage that you did when you applied.
The progress draw is typically paid out as the construction progresses, with payments made at 35%, 65% and 100% completion. For the lender, the progress draw mortgage is much riskier. The incomplete building is collateral on the loan. In the event of default, the lender could have an incomplete home that may not cover the full amount of the loan.

Types Of Construction

There are three types of construction.

  • Self-built
  • Contractor built
  • Purchase of a newly constructed home – a great option for those who want a new home but don’t want to go through planning and construction

The first two will qualify for progress draws or completion mortgage, the last will require a completion mortgage.
Because of its complexity, it is best to consult a mortgage broker before applying for a construction mortgage. The expert consultants at Certified Mortgage Brokers Toronto can help you every step of the way.

Variety of Rates for Construction Mortgages in Toronto

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We can help you finance the amount of money needed to purchase a new property, and/or cover construction costs to build the house of your dreams.

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Contact us today to arrange an in depth private consultation. We will support you throughout the whole process and inform of you of all the details that you need to know. With Toronto Mortgage Brokerage you can build your dream home and have a peace of mind with regards to financing and mortgage.

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Sean Hammond
2019-08-29

I had to port a mortgage to a new condo, Leon had excellent knowledge to get me through the approval process. When the bank made an error, Leon was quick to contact them to make sure everything was done right and on time. He is very professional and courteous and I recommend his service to anyone who wishes to apply for a mortgage.

Ronald McDonald
2019-08-27

Giving them 5/5 stars. Massoud helped me with my mortgage and he never missed a beat. He made the process very straightforward as a first time home buyer. Shopped around for other mortgages but he was always the first to get things for me. Highly recommend him

Shannon Jones
2019-08-23

I was looking to renew my mortgage and my previous lender was less than willing to do anything to keep my business. So I started to look for another brokerage to do business with and Certified Mortgage Broker stood out purely based on my interactions with Massoud. Massoud was professional and clearly had a keen sense of customer service; which I make a high priority when doing business with anyone since I'm in the customer service business myself. Peter rolled out the red carpet for me, walked me through my options, inquired about my plans with my current property, give me opinions and facts about rentals in the area, sales/purchases. In some respects he gave me more information about real estate than my real estate agent has!

Glen Plummer
2019-08-20

Selling and buying a home is a stressful experience and Leon with CMB in North York took all of the stress out of arranging the financing. He was very professional and clear about what I needed to provide to him. He used this information to arrange the best mortgage option on our new home, arranged the bridge loan to cover the closing period differential, and arranged closing out the mortgage with the previous lender.. Our experience with Leon is far better than the local in-person brokers that we contacted previously and Leon has helped us with a mortgage renewal in the past with the same excellent experience.

Colleen Power
2019-07-31

Leon returned my called from a missed call within 15 minutes of my call and I left no message. Leon and his team were fantastic. Even with the money issues we had Leon made me feel important and valued as a person.

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