19 Apr



Posted by: Chanele Langevin

I came across this article in the public Dominion Lending Blog. Information not be neglected when building-

Dominion Lending Centres – Accredited Mortgage Professional

“Building a new home – It’s something that many couples dream of. It can be an exciting, stressful, joyful, crazy time period that many walk away from saying “never again” or “bring on the next one!” We scoured the internet and sorted through our own experiences to bring you the Top 5 things to consider when you are building a new home.

1) It’s All In The Numbers

Just like house-shopping, building a home from the ground up requires you to know what you can afford. Most house plans offer a cost to build tool (usually for a nominal fee) to give you an accurate estimate of construction costs based on where you’re building. The numbers include the costs of construction, tax benefits, funds for the down payment and slush account, and other related calculations.

Once you have determined what you can and are willing to spend, meet with a Dominion Lending Centres mortgage broker to discuss how much you wish to borrow for your home.

Renovations and the actual building portion aside, we often are asked on what a mortgage looks like for an unbuilt home. This is where a “construction” mortgage comes into play. The budget you give your broker should include your hard and soft costs as well as the reserve of money you plan to have set aside in case you run into unexpected events.

It’s this initial budget that a lender will determine how much you qualify for.

For example, based on the lender loaning up to 75% of the total cost (with 25% down):

Land purchase price (as is) Total soft and hard costs Total Cost (as complete)



$600,000 x 75% = $450,000 available to loan

Keep in mind, the lender will also consider the appraised value of the finished product. In this example, the completed appraised value of the home would have to be at least $600,000 to qualify for the amount available to loan. The appraised value is determined before the project begins.

As well, the client will have to come up with the initial $150,000 to be able to finance the total cost of $600,000. A down payment of $150,000 plus the loan amount of $450,000 = the total cost of $600,000.

2) Choose a Reputable Builder

Builders are a dime a dozen, but not all of them are qualified or will be the right one for your project. Careful research is needed when determining who will be the head contractor of your home-building project. Alternatively, one of the best ways to find your perfect contractor is by asking friends and family who have gone through the process. Another great source is your mortgage broker! They often have many industry connections to some of the most qualified contractors and builders. Ask them if they know of anyone—we can almost guarantee they can will have at least one or more referrals for you.

3) Build a Home for Tomorrow

It can be tempting to personalize your home to the tenth degree—after all you are building it to meet your unique, customized wants and needs. However, keep resale value and practicality at the back of your mind at all times. Life can often throw a few curve balls that lead to you-for one reason or another-having to place the home for sale. If that time should ever come, you want to be able to appeal to all buyers easily and not have to hold the house longer than necessary. Ask yourself if the features you are putting into your home will appeal to others and if the features suit the neighborhood you are building in as well.

4) Go Green!

Now more than ever before energy efficient upgrades are easy to add to your home. When you are in the design stages, selecting energy efficient appliances, windows, HVAC systems, and more can save you money in the long run and may also make you eligible for certain grants and discounts. For example, the CMHC green building program rewards those who select energy efficient and environment friendly options.

5) Understand the Loan

As a final note, once construction is done it’s crucial to understand how a Construction Mortgage Loan repayment works. To make it easier, we have a list of points that you should know:

Construction loans are usually fully opened and can be repaid at any time.
Interest is charged only on amounts drawn. There are no “unused funds.”
Once construction is complete and project completion has been verified by the lender, the construction mortgage is “moved over” to a normal mortgage.
A lender will always take into consideration the marketability of a property. They will look at
not only the location based on demographic but also the location based on geography. For instance, a lot that is in a secluded area where no sales of lots have occurred in the last five years and mostly consisting of rock face may not be a property that they are willing to lend on.

Depending on the lender, you may have a time frame within which you need to complete construction (typically between 6 and 12 months).
There are a lot of things to consider when you build a home but a few things that can keep you on track and on budget are to have a solid plan in place, work with a builder you trust, build a strong team around you that can be there from start to finish, and to do your research. Once you have decided to build, call your DLC agent—they can help you get the ball rolling and can guide you to the first step of breaking ground on your new home.”

Source & Reference: https://dominionlending.ca/news/top-5-things-to-consider-when-building-your-new-home/

6 Apr

Mortgage pre-approval, what does it mean?


Posted by: Chanele Langevin

“You’ve decided it’s time to buy a new home. Whether it’s your first home or 25th, you’re now seeking a mortgage. And one of the first steps to getting the financing in place for your dream home is getting pre-approved for that mortgage. But before you start hunting for your new home, you need to understand a few things about the pre-approval process.

We know going through any financing approval process can be stressful. While it will never be stress free, there are some steps you and your mortgage broker can take to make it less of a nail-biter.

You should never assume you’re going to get financing because you make a lot of money, or if you’ve had numerous mortgages over the years.

A good broker will ask for all the necessary documents up front, like your T4s and recent pay stub. The reason why you want to provide your mortgage broker with all the necessary documents in the pre-approval stage is so there won’t be any surprises once your application hits the lender. This will also provide a game plan for what you’ll need to do if there are any speedbumps in the application, while also utilizing your time and the realtor’s and broker’s time so they know what they’re working with and are able to finance. Getting all the documents early also indicates to the broker and realtor you’re serious and makes the pre-approval more firm.

Where most brokers and lenders go wrong is they do a pre-approval but fail to collect documents. All of the sudden, a live offer comes in, but it doesn’t work.

If you get “pre-approved” without a request for documents, it’s basically worthless. It’s also good to note, no lender will give you a firm approval until you get an offer that is accepted.

So, you’ve now found the home you want and have an accepted offer. You’re moving from pre-approval to actual approval of financing but you’re not out of the clear yet. Any final approval is pending the lender confirming the details. Just because you’re pre-approved, doesn’t mean you’ll eventually be approved for any property you want. In some cases, you could have all the right income and credit on your side, but the property is a mess and you get declined. There’s a lot more that goes into to being approved than just income. Items like strata documents and property details are all part of the ingredients in your final approval sauce.

Even with all the documents, you’ll likely be advised by your mortgage broker, they’re only good for 30 days and you could be asked to update them for final approval when the time comes. But unless you’ve lost your job, bought a new expensive boat or run into some type of financial difficulty, updating should be a lot less stressful.

And it’s better to be stressed out about financing at the beginning of the home-buying process, rather then once you’ve got your heart set on a home you might not be approved to buy.”

Dominion Lending Centres Inc. April 2018 Newsletter