New Build Mortgages

Building the way to your best mortgage.

The stage of home-build you're buying into will affect your rate and mortgage options — here's what you need to know.

Buying your new build if possession is within 120 days.

You're in luck — because it's treated as a typical 'home purchase' as your first home or next home. You won't need to play a guessing game about future rates or payments, and can access your best rate and mortgage options with the lender that best suits your needs. (An expert, salaried True North Mortgage broker can find the right fit to save you the most.)

New Insured Mortgage Rules for Newly-Built Homes

Effective December 15, 2024:

• All insured purchases (including eligible first-time buyers) of newly-built homes can extend amortizations from 25 years to 30 for lowered payments and easier mortgage qualification, including (an added insurance premium will apply).

Have questions? Please talk to your expert True North broker.

Buying your new build if possession is more than 120 days.

If you're buying long before the finished build, for example, several months or even 1 or 2 years away — and the builder is funding the build themselves — you can look into a long-term rate hold:

• Typically, you can only get a long-term rate hold directly with a big bank
• The rate will carry a premium for the luxury of the wait
• Despite the premium, you may benefit if rates end up going higher — you'll be able to lock in with that lower rate you held so long ago
• If rates end up lower than your long-term hold, you can wait until within 120 days of your possession date and get a better rate
• A rate hold doesn't mean you're obligated to stay with the lender, which is why you'll have options as the closing date approaches

Draw (Construction) Mortgages

Most builders fund their own builds, but sometimes smaller or custom builders, usually for luxury homes, will require you to fund the building of your house based on milestones that they complete, and need funds for the next stage.

Like a long-term rate hold, Draw or Construction Mortgages are done through a big bank (usually at a bigger rate).

How a draw mortgage can work:

• When a draw is set up through a big bank, you'll already have the title of the home because it's technically considered a purchase contract.
• Most draws will already have a rate that you'll lock into with a mortgage at the time of possession.
• You may have the option of an open or closed draw mortgage.
• 'Open' would likely come with a much higher rate, but you would have the flexibility to choose a better term with the same lender OR switch lenders with no penalty.
• Some draws automatically lock into a closed term upon possession, but the rate would likely be lower than an open term.
• If your draw is with an A lender, it's likely a closed option with a lower rate.
• If your lender is B or private, it's likely an open option with a higher rate.

Can you get out of a draw mortgage to get a better rate?

A draw mortgage tends to span months or years as your new home is built.

If you're locked in with a higher fixed rate compared to market rates, you would have to pay a penalty to break to refinance or switch to a lower rate (check with your lender for specific details).

Or, you'll have to wait until your renewal comes up to switch without a penalty (fees may apply). Need a friendly renewal reminder? Schedule one here.

That new home smell? Breathe deeper thanks to our great advice.

Talk to us if your home possession is within 120 days — and we can give you unbiased advice on your best mortgage options. Are you a first-time home buyer? You may be able to get other rebates to lighten the financial load.

Read more in our blog for extra new-build tips, like the documents you'll need to provide, or getting your GST rebate.

Anywhere you are in Canada, we have volume rate discounts and down-home advice you need for a seamless process — online, over the phone, at a store location or a Mobile Mortgage Broker can come to you.