There are two types of mortgages when dealing with builders:

• Completion Mortgage

  • What it is?

    1. With a completion mortgage, the builder is able to finance the construction and the mortgage doesn’t actually become active until completion, then payments don’t start until after possession.

    2. The benefit of using RBC is that they can give you a rate-hold up-front with most major builders. When builders give you a 30 day possession notice, the mortgage specialist can reassess to see if the rates have gone down since your rate-hold. If they have, you get to accept the new lower rate. If they haven’t or they have gone up, you get to keep the rate that they originally promised to you. 

    3. Larger builders will typically lean towards completion mortgages. 

  • Steps: 

    1. Talk to Darren Sharko from RBC Royal Bank about a builder pre-approval, 

    2. Find the right deal from a builder and check it with your HACK&Co Teammate

    3. Make a great offer, get a great deal

    4. Darren will process your approval for financing and keep you safe upon closing by giving you the better deal between your original commitment or the market rate at the time of possession (subject to change)

    5. Build the home, and pay when it’s completed. 

• Draw Mortgage 

  • What is is?

    1. With a draw mortgage, the mortgage activates during construction and interest-only payments happen monthly on the amount that is drawn over the build period. (Talk to your HACK&Co Teammate about getting this covered by the builder in negotiations)

    2. The builder will get through a stage of the building process and then call the bank to let them know where they’re at, the bank will send an appraiser to double check, and then release a set amount of money for that stage. 

    3. Custom home builders will generally lean towards draw mortgages. 

  • Steps:

    1. Talk to Darren Sharko from RBC Royal Bank about a builder pre-approval, 

    2. Find the right deal from a builder and check it with your HACK&Co Teammate

    3. Make a great offer, get a great deal

    4. Darren will process your approval for financing and oversee the draw process with the builder, but you’ll meet the lawyer to start the mortgage near the start of the build.

    5. Build the home, and take over full mortgage payments once the construction phase of the mortgage is completed at possession. (Note: some builders may require you to make interest payments during construction)

Want to talk to Darren about your situation? 📲

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