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Construction Financing


Financing construction  loan  is a daunting task and you will need to

purchase the land and have plans drawn up  for the house.


Once those plans are approved from the city or municipality, your lender

will review this for the value of your home based on current market sales.


The financing for the land is one portion of the mortgage, the construction

financing is the other portion called a progressive draw.


The progressive draw is called at four intervals of the construction process. The

appraiser is called to inspect the property and advise at what stage the

construction is at and the value  to date. You should have liquid cash flow

and line of credit in place so that you do not run out of funds before your next

cash advance.


  • The 1st draw will be after the completion of the foundation approximately

      15 to 20% completion


  • The 2nd draw would be called after the roof, outside walls, roughed-in

      plumbing and electrical wiring is 45 to 55% complete.


  • The 3rd draw would be called after the drywall, bathroom, kitchen, all

      cabinets and fixtures are done, approximately 70 to 80% complete.


  • The 4th and final draw would be called after all the interior and exterior is

      100% complete.


The lender wants to hold 10% of the cost as a builder lien hold back in the

event that tradespeople are not paid.


You should consult a specialist for mortgages, real estate, insurance,

appraisal and legal services to get the best advice.






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