TCU Financial_Expert Advice.indd

EXPERTAdvice
FINANCE
Initial required documentation will include:
• Written employment and income
confirmation
• Proof of down payment or equity
• Copies of all sub-contractor quotes
By Mike Kovacs
Account Manager
TCU Financial Group
307 Ludlow Street
306.651.6500
[email protected]
www.tcufinancialgroup.com
I want to build my own home. What
do I need to know or do to arrange for
financing?
The financing of a “self build” project is a
multi step process. The most important
step is getting your finances in place before
you put a shovel in the ground. Obtaining
approval for your mortgage will not be
entirely dependent on your financial
circumstances and ability to repay; equally
important will be the credibility and quality
of your plan. Lenders will want to know
that you have properly planned the project,
made a thorough cost analysis, and have
an itemized budget requirement. They will
also consider your enthusiasm, experience,
and confidence in completing the building
within an acceptable timescale and your
reasons for undertaking the project.
As seen in Fine Homes Saskatoon
• Offer to purchase for land or a copy
of title if already owned
• Blueprint Appraisal
• Plans/ House Specifications
Your personal equity and cash are used to
fund the initial stages of the project. The
mortgage funding becomes available as
progress advances. The dollar amounts of
these advances are based on inspections
that determine completion of certain
stages of the build. As with any type
of construction mortgage, a certain
percent of the financing is held back until
final inspections have taken place and
searches confirm that the property is
clear of any builder’s liens.
During the construction period, most
lenders will ask you to make monthly
interest only payments. Generally, the
interest rate applied to a construction
or self-build mortgage is higher than a
purchase mortgage, giving you more
motivation to complete your house in
a timely manner. Once your new home
is built and passes all inspections and
searches, you will be provided with a
number of repayment options for your
mortgage.
I plan on purchasing a Ready to Move
Home. What obstacles might I face to
obtain financing?
A “ready-to-move home” is a house that
is constructed in a location other than its
permanent setting. Since it is not built on
the titled property of the eventual owner,
there are unique challenges for financing.
Essentially, two separate projects are
taking place – lot development and the
house build. Until the RTM is placed on the
permanent site, financing is divided. My
experience in helping homeowners with
these types of purchases has shown me
that almost every situation is different,
has its own unique sets of challenges,
and generally requires a combination
of interim financing and construction
mortgage (progress advance) solutions.
Working with a lender who is familiar
with projects of this nature will help to
ensure a positive and stress free buying
experience.
Do you have other questions or want
more information?
I would be pleased to discuss the above
information in more detail or provide
assistance on any other mortgage
financing questions you might have.
Please feel free to get in touch through
the contact information provided above.
FHS