Financing a New Ottawa Custom Home/Cottage or Major Renovation – Part 3
Financing a New Ottawa Custom Home/Cottage or Major Renovation
This week is the final week in our series about financing the construction of your own custom home/cottage or major renovation. Read week 1 and week 2 for the full picture. We spoke with two local mortgage experts, Pat Kavanagh, Mobile Mortgage Specialist, RBC Royal Bank and Debbie Davidson, Mobile Mortgage Advisor, CIBC, to gather some helpful information and tips. Every situation is unique; so this article is meant as general information only and mortgage rules may have changed since publication. For advice specific to you and your financial situation, please consult a qualified mortgage advisor.
How should clients prepare for a meeting with a mortgage expert?
It is best to meet with a mortgage expert very early in the process to receive a pre-approval and confirm that you qualify before getting too deeply into the design for your new home, cottage or renovation. It’s important to have a “game plan” and provide a general idea of your vision for the project. Debbie and Pat would both welcome the opportunity to sit down with you to provide more detailed information about the process and recommend the best financing options for you.
They will look at your cash flow and available funds, upfront costs and whether or not you own the building lot. You cannot borrow the down payment. If it’s a gift, the person giving the gift must sign a document to confirm the money does not have to be paid back. In order to facilitate the pre-approval process, bring the following documents to the initial meeting with your mortgage expert:
- proof of income (e.g., T4s)
- documents confirming self-employment income (if applicable)
- investment statements for RRSPs, TFSAs or other savings
- property tax bill for your primary home
- 90-day history of cash flow (e.g., bank statements)
Design services add value to a project just like bricks and mortar. Do the banks recognize the value added when the client engages a professional architectural designer?
The appraiser most definitely will take into consideration the value of professional design when determining the value of the completed project. The good news is that most people who build their own homes with the help of an architectural designer and project manager will build the home for less than the final appraised value. Great architectural design adds value!
Any final words of wisdom?
We don’t want to discourage anyone, but it does take substantial financial resources to build your own custom home or cottage. If you don’t have experience building homes, engaging an architectural designer and project manager will make it easier to obtain the required financing. The banks offer many options when it comes to building your dream home or cottage. Meeting with a mortgage expert will help you to decide what product is best for you.
If you are embarking on the journey of building a custom home or cottage or you’re considering a major renovation, take a few minutes to chat with Jim Bell. He has over 30 years of experience making dreams come true for hundreds of very satisfied home and cottage owners. He will listen. He will help you to shape your vision. And he will gladly carry the burdens so that your journey is easier every step of the way. If you are ready to discuss financing with a mortgage expert, he can connect you with Debbie or Pat, who will gladly meet with you to discuss the best financing options to achieve your dream. Connect with Jim today!