When buying a home in a traditional sense, you usually rely on what we all know as a standard mortgage when paying for it. However, when building a home from scratch, regular mortgage options might not do. Instead, you may have to get a construction loan or a different type of mortgage to build a home in Alberta.
Common questions include:
- How does a construction loan work?
- What makes a new build mortgage different than a conventional mortgage?
- What will I need to qualify?
- What will happen once my new home build is complete?
Getting the Best Mortgage Rates on a Construction Loan
Construction loans are a short-term or temporary financing style that helps you fund a home build. This loan gets pain through installments while your construction moves forward. Mortgage brokers and agents will often refer to these loans: construction loans, a self-build loan, a construction mortgage, or a construction-to-permanent loan.
Construction loans are usually short-term when working with a Canadian mortgage corporation, with around a one-year maximum. This gets used to cover all the costs for building your home. Throughout the construction phase, the loan gets released gradually. You only pay interest for the loan during the construction phase – this helps keep payments lower but never reduces the loan principal balance.
Local Mortgage Brokerage Rates and Details
Once you embark on a construction loan journey, these loans generally come with variable rates a bit higher than you may have for a traditional mortgage. After house construction is complete, you can refinance into a permanent mortgage or get into a new loan so that you can pay it off, sometimes referred to as the end loan.
How to Get a Mortgage to Build a Home in Alberta
Applying for a construction loan with a mortgage broker near you can be a bit of a complex process. You will more than likely have to do some major legwork to get what you need. It is all about working with the right brokerage firm and going through all the steps to get your project underway.
For most construction loan applications, you have to give the lender a realistic budget and project timetable. You will also have to present a list of construction details like floor plans, building materials, ceiling heights, insulation, and much more. An experienced builder will put together what is known as a blue book for all of the blueprints and details for your potential home build. Having everything together in one place makes it easier to get the approvals you need for your new home construction loan.
Do you need help trying to determine what your construction loan should be? We help when you require a mortgage to build a home in Alberta. Get in touch with us at Mortgage Design Group, LLC., and we can discuss all of your options and get you started on the approval process. You can call our offices at (403) 942-4099 or click here for a free analysis and approval online. We are here to offer the best mortgages for our clients!