Construction financing FAQ


Here are some FAQ about construction financing.

      • Can I add the upfront costs into the mortgage?
      • How many draws can I do?
      • How much of a lot can I mortgage?
      • Does the Construction Lien Act affect my construction financing?


Construction financing


Can I add the upfront costs into the mortgage?
      • All upfront expenses are your personal responsibility and these costs cannot be part of the construction financing.  For example cleaning the land, plans, permits and project management fees.


How many draws can I do with a construction mortgage?
      • Draws will not be until the construction of the home itself has progressed and only then there has been an increase to the property value.
      • Lenders require a progress inspection from an appraiser for all draws and this cost of this inspection is your responsibility.   Plus, the payment for the inspection is direct to the inspector at the time of inspection.
      • A draw is typically every 45 to 60 days. Also, the lender may request an interest payment if the time exceeds the 45 to 60 day period.
      • Interest is charged on the funds advanced to date.
      • The lender deducts interest and applicable fees from each draw.


How much of a lot can I mortgage? 
      • If you also need a mortgage for the lot, construction lenders will typically finance up to 65% of the current market value of the lot.  And, the 35% down payment will be from your own resources.
      • Learn more: Construction mortgages


How does the Construction Lien Act affect my construction financing?
      • With construction financing, your lawyer is also working to protect the lender's interests. They will be protected with reference to the Construction Lien Act, and that the required holdback of funds will apply to all draws.
      • The 10% holdback required by the Construction Lien Act is to be held in the lawyers trust.  And, it is held until 60 days after substantial completion.
      • The lawyer will release the 10% holdback 60 days after a completion report (minimum 97%).
      • For the release of the holdback, the lender must be in possession of a full copy of the occupancy permit.


Contact me today to learn more about construction financing in Ottawa.

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About Andrew Thake

Andrew Thake is a seasoned mortgage broker with over 15 years of industry experience. He’s assisted more than 2,200 clients in finding their ideal mortgage solutions. Recognized for his excellence, Andrew has received high honours and awards, including the National Rookie of the Year from TD Canada Trust and recognition as a Top 10 Ottawa Mortgage Broker in 2023. He has also been inducted into the Hall of Fame at Dominion Lending Centres and has consistently received their Platinum Award during his tenure as a mortgage broker.

Andrew’s dedication lies in serving his clients and prioritizing their needs with an empathetic approach. Throughout the application process, he provides tailored, informed, and efficient services to ensure the best mortgage solutions for his client’s unique circumstances. The best part of Andrew’s job is when he gets to see the joy on his clients’ faces following their mortgage approval.

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