Financial Literacy

Learn about your mortgage options for new builds with Tracy Jones

March 23, 2021

You’ve decided to build a home from the ground up. One of the first decisions you’ll face is whether to buy land to build on right away or buy land to build on in the future.


Land first build


Purchasing your land in advance is great if you aren’t in a rush to build.

To purchase an empty piece of land you will need the following: 20% down payment An appraisal of the land

It will give you the chance to pay down the mortgage on the land and build up equity that you can then use to build your house.


When it’s time to build, you will need to put 20% down on the project. The good news with paying down your land mortgage is you can use available equity towards the full project’s down payment.


Building right away


You can complete a build (subject to qualification) with 5% down through the Canada Mortgage and Housing Corporation (CMHC), however, your land still must be purchased with a 20% down payment. Once the land and build has been approved as a total value through CMHC, the down payment on the land will then be taken into consideration for the entire project.


Building process


Once you’re ready to build on your property, you will need to collect quotes to show much it will cost to build the home. This includes getting pricing for the foundation, plumbing, and electrical.


Next, you will talk to your lender about getting a mortgage to cover the building costs. We will confirm your personal debt servicing ratio to see how much you can afford. Then we will look at an appraisal that includes the value of the land and your house plans to determine the mortgage amount you need.


As your house is being built, an appraiser will come out as each stage is completed to confirm the progress and provide us with a report. As we get the reports, we will advance funds to your lawyer to pay the builder / contractors for the work.


Ready to get building? I’d love to meet with you to go over the process and see how Sunova can help you build your dream house.


Meet Tracy


Hi, I’m Tracy, one of the lenders at Sunova’s Birds Hill branch. I have been with Sunova for 12 years. Before working in the banking industry, I was an HR manager back home in the UK. Being a lender, I particularly enjoy helping people buy their first homes. It’s so exciting to watch home buying dreams come true. I lived in Oakbank for many years, and recently moved out to the lake. I enjoy nature, walking around the lake, and entertaining friends around the fire.

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