There are a few ways to find yourself a brand new built home. You can always purchase a Custom Build or new build. In this post, we are going to go over the Self Build Mortgage. This is where the client buys land, has had their drawings approved by an engineer and is ready to go out and find a lot or build in a developer’s lot.
This whole process is quite time-consuming, and you have to have a big dream and want to deal with the stress of the build, coordinate all the trades and work on time schedules for applying for draws. Build Upgrades usually occur within the build process, possibly even putting the home build project out of budget. This is where a broker/agent at Mortgage Suite can help provide buffers and work on a true cost. At this stage, the borrower who is building might want to involve a general contractor to coordinate the trades to save on time. There is a cost to the general contractor, however.
Purchasing the land can be done in many ways.
- Refinance of your current property. Accessing Your Existing Equity would be a general process to start the land purchase.
- If you do not currently own a home, then you will be purchasing the land with Cash and or Gifted Down Payment from a relative.
- Purchase the land with the Construction Lender. This is where an offer is written for the land, and on the closing date, the lender provides 65% of the land purchase value to begin the project. Note that they are funding 65% of the costs, allowing you to keep more money in your pockets to begin this self-build.
Once the land is in your name, and the purchase has settled… the fun begins!
You will begin building your home, with funds that are part of a schedule. Most homes are built in 5 Main Phases.
#1: PLANS AND THE PERMIT
The first step is to develop a set of plans with an architect or licensed designer. Once the plans have been approved, they must be sealed by a licensed engineer. All of these items are needed by the municipality before you can apply for the building permit.
#2: SITE WORK PHASE
The next step of the home building process begins with the site. A crew will need to clear the land and level it to be able to start construction. In many areas, additional fill is required to bring the house to a minimum flood elevation. Then the footings are dug and poured. Afterwards, a stem wall is laid and filled. All underground plumbing and electrical are laid in the stem wall, then the slab is poured. After the slab is poured, the exterior block wall is laid and then a lintel course is laid and poured, which secures the walls to the footings.
#3: FRAMING
Next up, the roof trusses are installed and sheathed. Then the roof is dried-in with tar paper. All interior framing is installed.
#4: PLUMBING, ELECTRIC ETC.
Once the exterior of the structure is complete, other areas of the home can be tackled, including:
- Electrical
- Plumbing
- HVAC
- Wiring for telephones, electronics and security systems
After this is complete, another slew of inspections will need to occur in order to move on with the home-building process.
#5: INSULATION, DRYWALL & FLOORING
After the home passes the next set of inspections, the next item is insulation. Insulation helps to control the home’s climate and also helps with the home’s energy efficiency. Common types of insulation include fibreglass, foam and blanket insulation. Once the drywall is completed, other exterior finishes can be installed, such as stucco or siding. Cabinets and flooring follow, as well as bathroom finishes, like sinks, tubs and toilets.
All these phases and the drawings converge to a certain value. We have companies that help with the build-on MARKET VALUE rather than COST VALUE. This can dramatically increase the amount of money you have to play with.
Always chat with a broker/agent at Mortgage Suite regarding other costs and get a spreadsheet breakdown before you head into a house-build project. It will most likely be the largest project you will work on in your life.
Now we know the process, you will need some help choosing the right mortgage for your home build.
