New Build & Construction Mortgages
Financing Built Around You — Whether You're Buying or Building
Buying a pre-construction home or building your dream custom property? At Better Mortgages, we know the mortgage process for new builds requires a different level of experience—and a lot more planning.
Whether you’re buying from a builder or taking on a construction project of your own, we help you secure the right type of financing for your timeline, budget, and goals.
Buying a New Build: What to Expect Based on Timing
If Possession Is Within 120 Days
If your new build will be ready in less than 120 days, great news — your mortgage is treated like a standard purchase. That means:
- You can access your best rates and terms from a wide selection of lenders
- You’re not limited to a long-term rate hold or tied to a big bank
- Qualification is straightforward, and we can hold your rate while you finalize everything
You’ll have access to our volume-rate discounts and a full suite of insured or insurable mortgage options — including fixed, variable, and hybrid products.
If Possession Is More Than 120 Days Away
If your builder expects possession later (6, 12, or even 24 months out), your mortgage process will look a little different.
In this case, we may recommend a long-term rate hold, especially if rates are expected to rise. Here’s how it works:
Only select banks (usually Big 6 lenders) offer long-term rate holds of 12–24 months
Rates for long-term holds carry a premium, as you’re locking in early
If rates drop before closing, you can re-shop within 120 days of possession to capture a better deal
You are not obligated to stay with the same lender just because you held the rate
At Better Mortgages, we’ll guide you through both the initial pre-approval and a secondary rate review closer to possession so you’re always positioned to win — no matter which way rates move.
Building a Home? You’ll Need Construction (Draw) Financing
If you’re hiring a builder or managing your own build, and the builder isn’t financing the construction themselves, you’ll need a draw mortgage (a.k.a. construction financing).
How a Standard Draw Mortgage Works
- The lender releases funds in draws, typically at key completion stages (e.g., foundation, framing, lock-up, completion)
- Each draw is verified by inspection, and funds are advanced accordingly
- You make interest-only payments on the funds advanced, not the full mortgage
- Upon completion, the draw mortgage converts into a standard mortgage term
Most banks follow strict rules around draws, inspections, and advance schedules. For example, you can’t access the second tranche until the home reaches 40–50% completion. This can slow down construction if delays arise or cash flow is tight.
The Alternative: Private & MIC Construction Financing
For clients who want flexibility and speed, we also work with alternative lenders — including private lenders and Mortgage Investment Corporations (MICs) — who specialize in construction lending.
Why Choose an Alternative Construction Lender?
No draw schedule required — funds are advanced upfront, so you or your builder have full control of your construction budget
Interest-only payments during the build ease cash flow. Plus, alternative lenders offer faster approvals and more flexible terms than traditional banks
—helping you keep your project on track
Some lenders offer pre-paid interest options (6, 12, or 18 months) — no monthly payments during construction
Easier qualification — ideal for clients who may not meet bank standards due to credit, income, or project complexity
This type of financing is particularly useful for:
Custom builds or major renovations
Self-managed construction projects
Investors flipping or repositioning properties
Borrowers needing speed or non-traditional income qualification
Yes, the rates are generally higher, but the reduced friction, faster funding, and greater control often offset the cost.And we’ll help you refinance into a lower-rate mortgage once the project is complete.
CMHC’s MLI Select: A Unique Option for Purpose-Built Construction
Key highlights include:
- Amortizations up to 50 years
- High leverage (up to 95% loan-to-cost and 85% loan-to-value)
- Favourable insurance premiums based on affordability & sustainability metrics
- Interest-only options during construction
- Developers or investors converting buildings into multi-unit rentals
- Builders of new apartment complexes or rental townhomes
- Projects incorporating energy-efficient upgrades or accessibility features
The Costs of Construction Mortgages
— What to Expect
- Draw mortgage interest rates (bank/institutional): Vary by lender; generally fixed or variable depending on term length and qualification
- Private/MIC rates: Higher, but with added flexibility and less red tape
- Fees: Inspection costs, legal fees, lender setup fees, and possibly brokerage or commitment fees
- Appraisals: Required at each draw stage with institutional lenders
- Construction insurance: May be required based on lender and property type
We Help You Build Smarter
Construction and new build mortgages aren’t one-size-fits-all. Whether you’re buying from a builder, customizing a luxury home, or breaking ground on a rental project, Better Mortgages will help you build the right financing strategy from the ground up.
We offer:
- Full access to A lenders, alternative lenders, private lenders & MICs
- Specialized expertise in draw schedules, inspections, and refinance take-outs
- Bridge financing, if needed, to transition between properties or timelines
- Step-by-step guidance so your build stays on time — and on budget
Let's Build Something Great
Speak to a Better Mortgages advisor today for custom construction advice, rate quotes, and a roadmap tailored to your build. Reach us by phone, email, chat — or have one of our mobile team members meet you on-site.
Your project deserves more than just a pre-approval. It deserves a Better Mortgage.