If you’re planning to build a new home or make major renovations to an existing one, you’ll likely need a construction mortgage. Here’s what you should know about this type of loan.
What are Construction Mortgages?
Construction mortgages are loans that are used to finance the construction of a new home or the renovation of an existing one. These loans are typically short-term, interest-only loans that are paid off when the construction is complete.
Construction mortgages can be either fixed-rate or variable-rate loans, and there are pros and cons to each. Fixed-rate construction loans offer stability because your interest rate will not change during the life of the loan. However, they may have higher interest rates than variable-rate loans. Variable-rate construction loans have lower interest rates, but they can increase during the construction period, which can add to the overall cost of the loan.
Construction mortgages are typically interest-only loans, which means that you only have to pay the interest on the loan for the duration of the construction period. The principal of the loan is not due until the construction is complete and you move into your new home.
One of the benefits of a construction mortgage is that you only have to make one application and one set of closing costs. However, construction mortgages are typically more expensive than traditional mortgages because they involve more risk for the lender.
Construction Mortgages in Regina
When you’re ready to apply for a construction mortgage, be sure to shop around and compare rates and terms from different lenders. It’s also a good idea to talk to a construction loan specialist to learn more about your options. Call the team at City Centre Mortgages so we can help!