The resale housing market has a lot of choice to offer. Yet a growing segment of the Canadian population is turning to fulfilling a long held dream of building their own personal piece of paradise. “John and Sally” were just those people and here is how they navigated the process of self build construction.
Location Location Location
The first and in many ways most important consideration for John and Sally in looking to build their own home is where to purchase the piece of land. If they choose a location too remote or in proximity to a perceived negative effect (ie. garbage dump) then they may have trouble getting mortgage financing. Often a region can have high development or environment fees as well that need to be considered as part of the overall cost. The best advice for them was to work with their mortgage professional before this selection is made in order to avoid disappointment further down the road. Choosing a location with either existing or easily accessed municipal services (water & sewage) will make overcoming this first obstacle a breeze.
Accessing Affordable Mortgage Financing
Once John and Sally have either purchased the land or at least identified the ideal plot – we need to consider where the money is going to come from to get them hammers swinging. What our lovely couple wanted was to finance the land and build all in one transaction. Most banks will only finance up to 50% of a land purchase and make you seek out another financial institution for the construction mortgage. I assisted them in sourcing a local credit union which had a mortgage product that was able to finance the full build out value including the cost of the land to 80%. John and Sally had the remaining 20% downpayment readily available from their own sources. This made the process streamlined and straightforward – we overcame the obstacle of accessing affordable mortgage financing.
Raise The Roof
On top of all the other considerations with a self build (contractors, delays, budgets) the last thing John and Sally needed was the construction mortgage draws to be a cumbersome, untimely or difficult process. In our due diligence, we found that the lender we chose had interest only mortgage payments during the construction phase with up to five draws included in the contractual agreement. This ensured that John and Sally could put their focus where it was needed most – in getting the roof raised and moving in to their new abode. As the project came to a conclusion it was simply a matter of an in house conversion of the construction mortgage into a new 5 year fixed low rate mortgage and they were off to more important things like making memories in their new home.
If you find yourself in that growing segment of society that is not content with someone else’s home design and want something more – do what John and Sally did. Pick a location that is desirable to you with the right features, work with your mortgage professional to source the best construction financing, and then you can get busy in making your self build dream home come true. Got questions about your own scenario? Hit me up below and we can get a clear picture of the options available.