We talked to a mortgage specialist today, and we have yet more hoops to jump through to get our house built. First of all the land that we own is zoned Agricultural, this is viewed as a risk to banks. The second problem that we have is that we are not building a basement in this house. I know it doesn’t seem like a problem but it is it all has to do with how you get paid from the bank; I’ll explain below.
When you get a building mortgage you don’t get any money, that is until you build. The way things are done is you get all your quotes into the bank, and they will get your mortgage approved. Then you have to build to a certain point before you can draw money from the mortgage. The money is given to you in four lump sums (draws). First you are to get the basement foundation poured, and backfilled (draw #1). Next the walls, roof, windows and doors (draw #2). Then all electrical, plumbing, and I think insulation and drywall (draw #3), then completion (draw #4).
As the story goes, we can’t get draw number one because we don’t have a basement. We are put on a payment plan much like a ready to move style home where draw 1 and 2 are combined. It wouldn’t matter too much to me except that the concrete is about one third of the total project cost, and as you may guess the walls, roof, windows, and doors add up to quite a bit as well. Well once all of this is done the money problems will be over (we’ll owe lots but we’ll have cash flow to build with).
I think we may use the first home buyers plan. This is where you can cash in $20,000 of RRSP’s to use as payment for your house, then you have 15 years to reinvest them without penalty.