When building your dream home, or eying your next renovation, the idea of costs and financial implications can be daunting. With the cost of living in the Lower Mainland, this sentiment is especially true for home owners in our residential vicinities. That’s why, when our new home build clients come to us with this in mind, we consider the option of new home construction financing.

New home construction financing does not have to be daunting, After all, you have plenty of other things to concern yourself with during a build! To assist you with the process, read on.


Here are 3 new home construction financing tips and tricks from the pros


1. Stick within your budget

Much like a mortgage, construction financing needs to stay within your budget. Keeping your expenses manageable while your home is being built requires intense scrutiny! While budgeting for your mortgage, consider doing the same for a construction loan. The two work very similar – available in fixed or adjustable options, flexible down payment options and rates dependent on the bank or financier you select.


2. Be aware of what you will need.

Getting a construction lone, as above, is similar to getting a mortgage. After speaking with your selected lender, you will be ready to take the next step – though what do you need for that first conversation?

In the conversation, you will talking about your basic debt, income and asset information. You will also need to have, or be prepared to provide, a signed construction or purchase contract with Reid Developments. The contract will outline the amount, which will include both construction and cost of land if the later is applicable, and the construction start/end times.


3. Learn what happens after you are approved

After you’ve budgeted for your loan and you have been approved with the documents needed above, what happens next?

In Canada, you can select one of two mortgage options – either a Process Draw Mortgage or a Completion Mortgage.

The Process Draw Mortgage is when the homeowner is granted funds from their lender in instalments through stages of the build. With this option, the lender sends an inspector to the property, who reviews the progress over time. This happens in four phases, which means a minimum of four visits will be required.

The Completion Mortgage, on the other hand, is when you have purchased your home through a new home builder and the construction is already finished. Completion Mortgages are often appealing to buyers because the terms of this mortgage are not official until 30 days before possession, which means that home buyers will have the option to make changes to their mortgage during this time. This can include the addition of extra upgrades or renovations to the new home build, to customize it to their liking.


With these three tips, we are sure you will see many similarities between a mortgage and new home construction financing. Both must be budgeted and approved by a lender, though the significant difference is when determining the type of financing you will receive. Working with a reputable lender during this process will not only make your lives easier, it will also help give you the peace of mind to begin your construction journey with ease.

To learn more about how Reid Developments works with new home construction financing, click here to contact us.