Building a Home
If you are building a new home, it is important to speak with your builder to determine the type of financing that is required. It will generally be one of the following two options:
This type of mortgage is approved with a lender before the construction of your home is complete. You will pay a deposit upfront to your builder; however, you will not make any mortgage payments until you take possession.
As with any new home purchase, you will need to avoid doing anything that could change your financial position or your credit score prior to taking possession, such as financing a large purchase or changing jobs.
This is a mortgage that is arranged before the construction of your home begins, and the amount that you need to complete your construction is given to the builder in stages, known as “draws”.
Depending on the lender, there are generally three to four stages where funds will be due to the builder. At each interval, an appraiser is required to ensure enough progress has been met, and the New Home Warranty policies are being followed.
Interest-only payments are charged to you throughout the various stages, and once the house has been completed, your mortgage term commences with regular monthly mortgage payments.