You have a clear image in your head of the ideal dream home, and so far no existing house on the market seems to cut it.
You don’t want to compromise on your dreams, not when you don’t have to. If this sounds like you, you’re probably already looking into applying for a construction mortgage. But what is it exactly and how do you apply?
What is a Construction Mortgage?
A construction mortgage is similar to a traditional mortgage, except that it’s a loan to finance the construction of a brand new house on an empty lot or a lot where the existing structure is scheduled for demolition.
Constructions loans differ depending on who is building your house: a builder who sold you the land, or a private construction company you hired separately from the sale of the land.
How Do I apply for a Construction Mortgage?
Like home mortgages, lenders will still have to consider your financial wealth. They still expect a down payment (which will generally be higher than a regular home mortgage), and your credit will be assessed.
You will also need to provide:
- A copy of the land contract or title
- Site plans that show the dimensions and other important specs of the property
- A building contract between you and the reputable builder
- Detailed building plans
Why Building from Scratch May be Right for You
Anyone who’s ever lived in a home built in the last century may understand the frustration and embarrassment of not having enough electrical outlets, storage space or open concept areas. Sometimes gutting a building and remodelling the entire interior does the trick. But there are obvious complications and risks involved. If you want a modern home that can accommodate your 21st-century needs (e.g. built-in USB plugs and energy efficient everything), then it may be worth building from scratch.