In case you didn't know, construction mortgages are available through mortgage brokers! Even though the options for lenders is slim, it can still be accomplished.
Unlike regular purchase mortgages where the funds are released on closing, the funds for construction mortgages are released in stages. With typically 15-month construction periods, here are the following advances:
1.) Optional First Advance Prior to Start (Uninsured Mortgages Only)- 65% of vacant land value.
2.) Optional First Advance at 15% Complete (Insured Mortgages Only)- Excavation and foundation complete.
3.) First Advance Received at 40% Complete- Roof on, building is weather protected, access secured.
4.) Second Advance Received at 65% Complete- Plumbing, drywall complete, furnace installed, etc.
5.) Third Advance Received at 85% Complete- Kitchen cupboards installed, bathroom completed, doors hung, etc.
6.) Fourth Advance Received at 100% complete
Appraisals are done at every stage and the cost of each is deducted from each advance from the lender. If you have any other questions regarding construction mortgages, please feel free to reach out!