Construction Builders Mortgage

This mortgage is right for you if:

  • You are having your home built and want flexible terms at competitive rates.

Mortgage Features

Flexible terms and competitive interest rate during construction so you will save money.

Interest is only charged on the money you receive, rather than on the whole mortgage amount, so you pay considerably less interest.

Automatically converts to a regular mortgage after the home is completed or 6 months after the first draw, whichever comes first, making the transition easy from a construction mortgage to a regular mortgage.

Technical Info

Advance of Funds - 80% of the appraised value at each of the following stages less 10% holdback to meet with the requirements of the Construction Lien Act. This will be released 60 days after substantial completion of improvements.

Possible stages for advances:

First Stage

Excavation, foundations, beams, posts, joist, sub-floor, back-fill, framing, sheeting, roof, and door/window frames.

Second Stage

Brick, stucco, siding, doors and windows, rough electrical, rough plumbing, heating ducts or pipes, insulation, vapour barrier, basement floor, and the heating equipment installed.

Final Stage

Lath and plaster/drywall, finished floor, finished electrical, including fixtures, finished plumbing, finished carpentry including trim, and painting.

Important Things to Consider

The home must be completed within 12 months.

Builder’s All Risk insurance must be assigned to the credit union with losses payable to the credit union.

Members must supply the credit union with building plans. These plans must be accepted and approved by the appropriate municipal authority.

Approval must be clearly indicated on the face of the plans. Members must also provide evidence of appropriate zoning and land use, as well as a building permit.

The credit union will forward them to the credit union’s appraiser, who will provide an estimate in writing of value as well as disclosure of any items which, in the opinion of the appraiser, would materially affect the value of the property. The appraiser will also review the cost estimates and determine if they are reasonable.

After the building foundation has been completed, the credit union is to obtain a building location survey from the borrower bearing the stamp of a registered Ontario Land Surveyor. The credit union will disburse funds to the lawyer in trust.

Disbursements cannot be made without full disclosure and clearance of construction or other liens. Sub-searches will be completed immediately prior to the disbursement of subsequent funds.

Additional Information

At any time during each year of the term of a mortgage, the borrower may prepay up to 20 per cent of the "original principal" amount of the mortgage without notice or bonus. The prepayment may not exceed 20 per cent of the original principal amount in any one year, even if the borrower has prepaid less than 20 per cent in previous years.

  • Once during each year of the term of the mortgage, the borrower may increase the principal and interest portion of the monthly payment by up to 50 per cent of the principal and interest payment "originally" required by the terms of the mortgage
  • Any amount prepaid in excess of the amount allowed, would be charged an interest bonus/penalty equivalent to the greater of:
  1. Three (3) months interest at the interest rate in effect on the Charge at the time of such prepayment, on the amount prepaid; OR
  2. An interest differential adjustment, calculated on the amount prepaid, in an amount which is calculated in accordance with Sudbury Credit Union’s then usual procedures and is based on the difference between:
    1. the annual rate of interest determined by the Credit Union in its sole discretion to be the interest rate that would be in effect on the prepayment date if the Credit Union was at that time prepared to lend to the Borrower on the same terms (including prepayment terms) as the Loan Agreement for a term from the prepayment date to the balance due date and;
    2. the rate at which interest is then payable under the Charge.

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