5 things to know before financing the building of your new home

by | Mar 12, 2014 | Mortgages

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Some home buyers prefer to purchase new. It allows them to custom build their home according to what they want, and it helps avoid the back and for the negotiating with other homeowners.
If you’re interested in purchasing a brand new home, Mortgage Design Group can help make it possible. Here are a few things to keep in mind when buying a new home.
When purchasing a brand new home, you will likely fall into one of 3 categories:

  1. Use your money to build a home with a home builder.
  2. Use your money to hire all the trades yourself, acting as your own contractor.
  3. Builder uses their own money to pay for building the house.

Whichever of the 3 options you pick, you’ll probably choose one of 2 types of financing options:

  1. Progress draw
  2. Completion mortgage

A progress draw allows you to draw your financing in stages as construction progresses (hence the name). Typically, funding is available at 35%, 65%, and 100% completion. If you are purchasing the lot as well, you may have to use a portion of the first draw to pay for it.
completion mortgage is a conventional mortgage, dispersing funds to you once your house is complete. Sometimes, you may have to pay a small deposit to the builder prior ot construction starting.
Contact us today so we can discuss which options best fit your needs.