Many homebuyers look into purchasing a new build home when they are considering home buying options. This type of home purchase requires a specific type of mortgage known as a construction or new build mortgage. There are 2 types of construction mortgage options that you can choose from, each with its own benefits that we will look at in a moment. If you want to know about this type of mortgage you can give our Mississauga mortgage broker team a call for all of the details.

What is a Construction/Builders Mortgage? 

A construction/new build mortgage is set out in such a way that it allows you to draw funds down at specific stages in the building process. They are facilitated on a progress advance basis and the amount that you obtain the mortgage for will be based on what is needed to complete the home. As opposed to having the full amount advanced upon approval, funds are released at specified stages of completion. These are referred to draws. If the land that the home is being built on is owned by the homebuyers, they can use that land as equity to go towards the first financial draw. In situations where the land has not been purchased yet, the first draw will allow you to have the funds needed to purchase the land.

Types of New Construction Mortgages

As mentioned earlier, there are types of construction/new build mortgages: a completion mortgage and a progress draw mortgage. There are also 3 ways in which you can have your home built. We’ll look at the two mortgage options first.

Completion Mortgage 

Completion mortgages are used in situations where you are buying a home that has been newly built and funded by the builder. This means you would only need to funds from the mortgage once the home has been finished.

Progress Draw Mortgage 

For homes that are being constructed by a hired registered builder and using your own funds, you would need a progress draw mortgage. You will usually have 3 specified times for drawing funds: 35% completion, 65% completion, and 100% at total completion of the home. This mortgage is a bit more complex and requires a solicitor to create a draw contract.

Built By a Contractor Using Your Funds

For this type of mortgage, the client finds a registered builder and enters into a contract with them. You can get either obtain a progress draw or a completion mortgage in this type of situation, with the builder requiring the first draw to purchase supplies and start building the home.

Self Constructed Home 

Some homebuyers will choose to build their home themselves acting as their own contractor and hiring out subcontractors to do any specialty work, such as plumbing and electrics. This scenario can use both mortgage options as well.

Homes Built By a Builder With Their Own Funds

In this situation, the construction of a home is done by a builder using their own funding. Some examples are the construction of townhouses, condominiums, or a home that the builder will be selling once completed. For this situation, a completion mortgage would be needed.


The documentation that you will need for a construction/new build mortgages is the same as what is required for a traditional mortgage: employment, income, and equity proof, proof of your identity, and construction quotes if it will be a new build. Other documents that may be required are signed contracts with your registered builder, land registry details, and a copy of the title for the home if you already own it. You will also need a House and Plans Specification, insurance certificates, and a full appraisal.

If you are considering a construction/new build mortgage and need more details, give our Mississauga mortgage broker team a call today!