Arranging a Construction Mortgage
If you need financing to build your home, you will need to obtain funding through a construction mortgage. When you apply for this type of mortgage, you must own the building lot outright.
With a construction mortgage, you draw on funds (or receive advances) as the building of the home progresses.
You receive these advances at specific building stages determined when you apply, based on the percentage of the construction that is completed (an appraiser is used to make recommendations on how much of the home has been completed and what the cost will be to finish the home). Typically, you will receive four advances, with your first advance delivered when the foundation is ready for backfill.
During the build, you make interest-only payments on your mortgage. When the home is completed and ready for occupancy, the construction mortgage converts to a traditional mortgage with monthly payments of principal as well as interest.
If you need a construction mortgage for your home, talk to an RBC Mortgage Specialist. Our specialists have the expertise to assist you with this type of financing.
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