advice
Building Your Own Home
Deciding whether to build or buy a new house can be a tough call. Learn more about the benefits, processes, financial requirements, and challenges to ensure it’s the right decision for you.
Is Building Right for You?
Building your dream home is an exciting and rewarding experience. This can include buying a newly built home, or purchasing a lot and building from the ground up. Knowing that you’ve looked at all the options carefully can help you confidently make the choice that’s right for you.
Let’s Compare: New Build versus Resale
Building New
When building new, you can build the home yourself or through a licensed professional and you will likely be the first to live in it.
Benefits:
- Choose your own style, features and finishes
- Up-to-date technology and building codes
- Energy efficient, likely lower utility bills
Potential Challenges:
- Requires decorating and landscaping
- Need to envision the finished product
- Delays waiting for completion
Buying Resale
A home up for resale has (most likely) been lived in by one or more owners and may be for sale by owner, realtor or financial institution.
Benefits:
- You can see upfront what you are buying
- Available to move in quickly
- Mature landscaping, fencing, etc.
Potential Challenges:
- Unexpected repairs and/or maintenance
- Older technology and materials
- Less energy-efficient, higher utility bills
Financial Planning for Your Self Build
With a construction mortgage, money is lent at different stages of the build, so you will need much more capital than your typical 20% down payment. Be sure to establish how much equity is required, and then add 10% for unexpected cost overruns and delays.
With a self build, you are responsible for the upfront costs, for example materials and installation, and will be reimbursed after an inspection has been completed. An appraiser will inspect the construction to determine the percentage of work done toward completion. In a process known as a “draw,” you are advanced those funds to cover that stage of the build completed. (Maximum of four draws)
At the final inspection (98-100% complete) your mortgage is funded in full – except 10%, which is the hold back amount required by the Construction Lien Act. Tradespeople have 60 days to register a lien for non-payment, so a clear title search completed after 60 days will release the final 10% of your mortgage.
Ask the Experts: Questions for Realtors, Builders, Lawyers
Regardless of which option you lean towards, always check with the people who know the business!
Important details for new homes:
- What’s included in the price (what is the cost to build, building plans, upgrades)?
- What is the deposit amount required and payment timeline?
- How will you be updated on the build schedule and any delays?
- For more information on builder history and warranty details in the home building industry visit www.hcraontario.ca
For resale homes, you’ll want to review:
- Comparable properties and their prices
- Property taxes and recent utility bills
- A home inspection by licensed provider
- Quotes on required repairs/renovations
For every home purchase you should obtain approval from your borrower prior to submitting a firm offer and have your lawyer review your offer before signing!
Ready to build your next home with Libro or have questions?
Meet with a Coach to ask questions, or start a pre-approval. Libro will require information about your current financial situation for a pre-approval, including:
- Income
- Outstanding debts, such as personal loans, student loans, credit cards, etc.
- Monthly expenses