Real Estate

Draw mortgage vs completion mortage?

  • Last Updated:
  • Jul 3rd, 2019 11:01 am
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Newbie
Jun 4, 2013
21 posts
3 upvotes
Edmonton

Draw mortgage vs completion mortage?

I am deciding between two home builders in my city. One says draw mortgage is best, the other says completion mortgage. What’s the pros and cons of each? Is one usually better than the other?
2 replies
Deal Guru
User avatar
Mar 23, 2008
13006 posts
10009 upvotes
Edmonton
First step is understanding what the two types of mortgages are:
https://dominionlending.ca/news/buildin ... mortgages/

Seems to me the advantage of the draw mortgage is for the builder, as they get to draw funds along the way. Which will likely mean you start paying interest along the way as well...

C
Member
Oct 21, 2013
305 posts
161 upvotes
waterloo, on
Draw mortgage is made for builders benefit. in the article that pp shared there is a line "You also do not have the option to add upgrades throughout the build process with a draw mortgage as the first advance sets the loan in stone."

if above is true, then whats the point of buying through a builder if you cannot customize your house.

Usually you have to make payments to builder at set intervals or a lump sum initially out of your own pocket and then at the time of closing, gather the remaining funds through mortgage or whatever. I think this is the best way, as you get enough time to gather funds for down payment and to close your house later.
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