Building a Home Building a Home

Not necessarily. If you already own the land on which you plan to build, you don’t need a lot loan.

Otherwise, the need for separate lot and construction loans will depend on your unique circumstances, including who currently owns the lot on which you plan to build and the builder/developer you’re working with.

A construction loan finances the building of your new home. As your home nears completion, you’ll apply for a permanent mortgage that will be used to pay off any debts associated with the building of your home, including your construction loan, and other costs.

As the borrower of a construction loan, you’ll never have to handle funds. Instead, we’ll work directly with the builder to disburse funds and pay for the building of your home.

There are typically five stages of payment, which are made after key points in the construction process at the request of the builder: the construction of the floor/slab, the building of the roof and frame, the lock-up stage, the fit-out stage and the completion of the home. Each home is different, however, and may include a different number of payment stages.

No. Your permanent mortgage will be reduced to reflect any unused funds from your construction loan.

Your first scheduled payment date will be approximately one month after the first draw is completed. During construction, you’ll only make payments on the interest accrued.

The full principal amount will become due at the end of your loan term. Most often, borrowers refinance that amount into a permanent mortgage.