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Mortgage Issues: Do You Have Plans To Build Your Dream Home?

How to make the experience a nightmare

While building your own home can be a creative and exciting experience, there are some key things to consider in avoiding financial challenges.
Building your own home can be a creative and exciting experience, but there are some important things to consider to avoid financial challenges. Photos by FeverpitchedGettyImages/Getty Images / iStockphoto

Many Canadians choose to build custom homes with special features to suit their lifestyle and tastes. Building your own home can be a creative and exciting experience, but there are some important things to consider to avoid financial challenges. Here, seeking the advice of a professional partner, including a mortgage specialist, is the first step in making this exciting journey a wonderful one.

The key to a successful construction project is for you and your contractor to agree in advance on detailed plans, item budgets and schedules. Please always write! Clearly written agreements and communication reduce surprises and unexpected costs.

There are a few things to keep in mind. Make sure that zoning the

parcels allows you to build a home.

Check if the builder / contractor is licensed and in "good condition" BC. A member of the Housing and Authorized Third Party New Home Guarantee Program.

Professional builders / contractors are often members of organizations such as the Canadian Association of Home Builders.

Familiarize yourself with all relevant potential construction costs, including:

It is important to understand the lender's funding requirements and the contractor's desired payment schedule in each phase. Most contractors require payment in stages. Usually after the foundation is established, after framing is complete, after the interior is complete, and after the entire project is complete.

Get the money you need

Throughout the various stages of construction, the contractor will fund you to complete a particular job Request. To lay the foundation. At this point, most lenders will inspect your home site and send an appraiser to determine the amount of work completed. The draw amount is usually calculated based on this inspection to ensure that the lender has withheld enough money to complete the house. It is important to note that in accordance with

B.C., lawyers withhold 10% of each draw. Lien method. This government requirement helps ensure that merchants and suppliers are rewarded for the work they have completed. If no lawsuit has been filed against your property, your lawyer will release this injunction to you 55 days after the construction is completed.

When it comes to construction mortgages, the solutions are very diverse and it is important to do your homework here. Some lenders only offer variable interest rate loans during construction, while others can also offer fixed interest rate commitments.

Choosing the right lender can save you and your family thousands of dollars.

Your home is one of the biggest investments you've ever made. Work with trusted and experienced professionals to protect yourself.

Randy Chin
RBC Regional Manager Housing Housing Loan
Follow Randy on Twitter @RBCrandychin
Instagram @rbcrandychin

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