Best Mortgage Broker in North York, Toronto
If you've decided to build your dream home rather than buy an existing one, you may be surprised to know that you cannot opt for a traditional mortgage. Instead, you'll likely get a Construction Loan.
Construction loans are higher-interest, shorter-term loans used to cover the cost of building or designed towards rehabilitating your home instead of a traditional home loan, based on the house's fair market value and the condition of the house.
There are two types of Construction Loans:
- Progress-draw mortgage is used to fund the build where the builder can draw money throughout the construction process. A draw mortgage is a convenient way for builders to pay for the labour and construction material as they build the home. The loan is divided into increments, with an inspection needed before each draw throughout the construction process to make sure it is on time and is being done correctly. If the build doesn't pass inspection, the builder doesn't get the next payment.
- Completion mortgage is a process in which the buyer takes out the full mortgage after the building. The benefits of this option are that you don't have to put down any payments before you take possession. It is arranged 30-45 days before the building is completed. The total amount taken in the progress-draw is paid out and combined with the new completion mortgage for the settled term of 3, 4, or 5 years.
At Mortgage Transit Inc., we offer finance to the builder on both pre-sold and a speculative basis. To add to that, no front-end fees or back-end fees are charged. Cancellation fees are dismissed with certain mortgage plans, and we also offer the best construction rates and flexible draw schedules.
Additionally, our programs let you receive funds on each home as construction proceeds. Advances are available to you at each stage of construction: Lock-up – 35% to 55% complete, Drywall – approximately 75% full and Completion – 100% complete.
Please note that additional draws may be available with approval.