Building The Home of Your Dreams…
Single Family Custom Home
The Progress Draw Mortgage
This is where the homebuyer is granted the funds from their lender in instalments throughout the various stages of the build until the project is completed or close to completion. During each of these phases, the lender will send a home inspector to the property to review the building progress and make sure that everything is going according to schedule. After each visit, the inspector will submit a progress report to the lender who will grant more funds accordingly. If the inspector determines that the construction is not up to par, the lender might hold the next draw until deficiencies are corrected and/or call the mortgage. So it is important you choose the right professionals to build the home of your dreams. In order for us to be able to start, we will have to order an “as is” and “as complete” appraisal which gives us the value of the land and then the value of the home you are planning to build. Draw schedules are pre-determined and based on the “as is value” of the property
- Land Advance- This draw is based on the raw land value. Sometimes clients buy homes with the purpose of tearing down the current home and building a new one from scratch. We will not lend on the value with the home. We base our first draw on the value of the land which all appraisers will always give. Our first draw will be up to 70% LTV of the land value and on case by case we may go up to 75% LTV
- 1st Draw – This draw is usually made at the roof stage 35-30% complete. Meaning the client will have to have the funds to complete 30-35% of the home. A lot of the times the initial land advance will cover most or some of this work and the client will have to come up with the difference.
- 2nd Draw– “The Lock-Up Draw” will be received when the home is about 30-50% complete. This means that the foundation is laid and the windows and doors are installed so that you can “lock up” the house at the end of the day. This is the first draw you’ll receive if you’re still mortgaging the land you plan to build on.
- 3rd Draw – “The Drywall Draw” will be received when the home is about 65-70% complete, with the heating system put in and the drywall ready to be painted.
- 4th Draw – “The Completion Draw” will be received when the house is either completely finished, or very near to completion (90-100%). The electricity and plumbing should be working, all permits and contracts must be signed, and the home is liveable.