Construction mortgages fund a build in 4-5 stages — money advances only after each phase is complete and inspected. Higher rates than completed mortgages, more paperwork, but the only way to finance a from-scratch build.
Funds advance in 4-5 stages as construction completes. Interest charged only on drawn amount. Standard for self-built or contractor-built homes.
A regular mortgage funded in one lump sum at occupancy. Used when buying from a registered builder who self-finances the construction.
Strong for self-build owner-occupiers
Allows progress draws via builder
Best fit when working with registered builder
B-lender option for self-employed
For complex builds or bad credit
Cost overruns must come out of your pocket. Build a 15-20% contingency BEFORE applying.
If construction stalls beyond 12 months, lenders can call the loan. Hire a project manager if you're not living onsite.
Unregistered builders force you into progress-draw mortgages with higher rates. Registered builders unlock standard completion mortgages.
Construction Lien Act requires 10% holdback for 45-60 days post-completion. Lenders enforce this even if you don't.
13% HST on every line item in Ontario. New Housing Rebate refunds part of it but only for primary residences.
Final appraised value may be lower than budget. Lender then funds based on appraisal, not what you spent. Pre-confirm with the appraiser.