How To Finance Building Your Own Home

June 11, 2021

The popularity of custom homes continues to grow throughout British Columbia. Although building your own home is exciting, it can also be challenging, especially financially because there are so many upfront costs. Fortunately, there are lots of ways to build your dream home nowadays without breaking the bank thanks to financing and innovative construction methods.

Growing Homes

Lamelli’s prefab modular homes can be built in modules, meaning you don’t have to build your entire home all in one go. Our Growing Homes are designed to evolve alongside your needs and finances. Start with the core essentials of your home and add bedrooms and additional living space later on. This is a great option for those who do not need a larger home right away, young professionals, families and those who cannot afford to build their dream home all at once.

Home Construction Mortgages

A home construction mortgage can provide the financing necessary to build the home of your dreams. Applying for a construction mortgage is easy and you can do it before construction begins. To do so, contact a mortgage specialist and they will arrange for an appraiser to determine the value of your land lot and building plans.

Typically, construction mortgages are paid in intervals called draw stages that coordinate with completion milestones and your contractor’s preferred payment schedule. In order to determine this, you will need to establish a payment schedule with your contractor that fits these funding requirements. Most contractors require payments in stages, such as when the foundation is in, after the interior is finished and upon project completion. With Lamelli’s prefab homes, the amount you’ll need to spend on construction labour is dramatically reduced because the components are delivered to the building site ready for assembly.

After approval, your construction mortgage rate guarantee begins and your lender usually requires you to take the first draw of the mortgage within 90 days. You will also have a defined construction timeframe, typically one year.

*Note: You can also finance the land purchase through the first mortgage draw!*

While your home is being constructed you will pay interest only on the total mortgage amount drawn to date. Once your appraiser’s final inspection report declares your home is 100 percent complete and ready for occupancy you will begin to make mortgage payments on both principal and interest.

Plan Ahead

The key to successfully building your own home is careful planning. If you can’t afford to build the home you’ve envisioned all at once, consider our Growing Homes and plan on building your home in stages.

If you plan on applying for a home construction loan establish a realistic budget, create a detailed plan and timeline and finalize your design and building plans. The more time you put into researching and planning, the fewer unexpected costs you will encounter down the line. Contact us to get started on building your custom modular home today!

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