Construction Draw Mortgage
The mortgage provides progress payments throughout the construction process.
A draw mortgage is a little more complicated to setup and manage throughout the home building process. This type of mortgage is fully approved up front and money is advanced at various stages of completion during the construction of your new home.
Qualification and Guidelines
New construction must conform to the National Building Code and the latest edition of Residential Standards Canada - or the applicable municipal and provincial building codes.
Builder/contractor must meet general profitability and credit worthiness as per lender's guidelines.
Builder/contractor must be a member of the New Home Warranty Program (NHWP).
Regular requirements related to income, down payment and credit worthiness apply.
Progress Draw Schedule
Draw #1 - Optional First Advance Prior to Start of Construction - 65% of the lending value of the vacant land
Draw #1 - Optional 15% First Advance - At 15% complete; Excavation and foundation complete
Draw #2 - 40% Complete; Property is framed, roof on, windows and doors installed, lock up stage.
Draw #3 - 65% Complete; Plumbing and wiring started, plaster/drywall is complete, furnace installed.
Draw #4 - 85% Complete; Kitchen cupboards installed, bathroom completed, doors have been hung, etc.
Draw #5 - 100% Complete; Advanced upon taking possession.
An inspection is required at each stage of financing to confirm the work has been completed before advancing the next draw.