Construction Mortgage Application Process For Self Builds


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“Here’s A Basic Outline of What You’re Going To Need To Apply For an Institutional Construction Mortgage For a Self Build Project”

With an institutional construction mortgage application, you are effectively applying for a construction loan and a long term take out mortgage at the same time.

For a straight construction loan where a take out mortgage is not a requirement of receiving a commitment, the focus is on the equity in the project. But with an institutional construction mortgage, the lender will determine mortgage eligibility of an individual application based on both equity investment and repayment assessment.

When applying for a self build home construction loan, here is the initial information that most lenders are going to want to see first.

  • Designer Plans. Having a completed design or set of blueprints for a project provides a mortgage lender with not only an accurate outline of the project, but the amount of work gone into it and how close you are to actually starting construction.
  • Contract With Builder or General Contractor. The construction mortgage provider is going to want to see that you are working with a reputable home builder and that their is a contract in place or drafted to be completed, including a quote for the scope of work they will perform for you.
  • Deed of Land or Offer To Purchase. Construction loan applications will typically not be considered if you don’t have the subject property secured or have the ability to secure it through an accepted offer to purchase.
  • Mortgage Application Form. The basic construction mortgage application form will outline the personal net worth of the applicants, a summary of their annual cash flow, and provide permission for the construction mortgage lender to conduct a credit check.
  • Employment Confirmation. Because of the need to have the long term or take out mortgage approved at the same time, the applicant(s) also need to provide at least three years of earnings history supported by their Revenue Canada personal income tax notices of assessment and at two pieces of employment confirmation (T4 and a recent pay stub, or an employer letter and a recent pay stub).
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