Thinking about buying an infill lot and building your own home? How do you finance this? Well, a mortgage broker can help!
Let’s talk a little bit about infill developments. You know, in older neighbourhoods, a lot of the housing stock is getting old and outdated, and people who don’t necessarily want to live in outer communities with longer commutes are looking at buying the lot, tearing down the house, and building a new home.
If you’re going to do that, what the lender will do is treat the purchase as just lot value. They’re not going to lend on a house that you’re about to tear down. So when you buy a lot, you need at least a 25% down payment.
Then when you’re going to do the build, you’ll most likely need what’s called a draw mortgage, a builder’s mortgage or a construction mortgage. What those mortgages entail is you need lots of cash because you have to pay for the cost of different stages of construction in advance. Then an inspection is done and the lender says okay, you now have a foundation there—we’re going to give you some money.
Then you have to pay and get the house to what’s called lockup stage. So that means there’s a house with windows and doors and it can be locked up. Then the next stage would happen, and then there’d be another stage at drywall where, you know, basically the plumbing and electrical is in. And then the final stage would be after the house is complete. So it’s a bit of a process. You probably need to talk to a mortgage expert on how to get from A to B, and I’d be happy to help you out, so give me a call
I also have a helpful video about why now is a good time to get a variable-rate mortgage.
About Jason Scott, Edmonton Mortgage Broker
Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’ll be your trusted partner who will help you get the right mortgage for your family home or Investment property. I’m Jason Scott, and I’ll be your Mortgage Broker Edmonton.