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The Canadian Dream Home Blueprint - Pre-Construction Mortgages

What Is a Pre-Construction Mortgage?

Pre-construction mortgage is like a sneak peek at your dream home. You lock in a deal with the builder before they even start swinging hammers. Basically, it's a loan you get before the actual construction kicks off. You put some cash down, like a deposit, and the lender gives you the green light. This helps secure your dream pad at today's prices, even if it won't be ready for a while.

Now, regular mortgages, well, that's what most people get when they buy an already-built home. You borrow money to pay for the house right now and pay it back over time.

In a nutshell, pre-construction is about future digs, and regular mortgages are for homes that are already good to go. Got it?

Now, it’s important to note; pre-construction mortgages are meant for financing the construction of a home, NOT for purchasing land. They're like the starting point for building your dream house on that awesome piece of land you've got your eye on. To buy land, you'd usually need a different type of loan, like a land loan or a vacant land mortgage. Once you've got your land, then you can dive into the pre-construction mortgage world to fund your dream home.

You Can Potentially Save Money

When you snag a pre-construction mortgage, you're not just getting dibs on a future home; you're locking in lower interest rates. See, interest rates can change over time, but with this mortgage, you're kinda time-traveling to today's low rates. So, when you move into your brand-new place, your monthly payments are way friendlier on your wallet.

Getting Your Ducks in a Row

Okay, now that you're excited about the potential savings, let's get practical. What do you need to make this happen? Well, there are a few key documents you'll want to have handy:

Proof of Income: Think pay stubs, tax returns, or any documents that show you're financially stable.

Credit Score Info: Your credit score tells the lender how responsible you are with money.

Employment History: They want to know you've got a steady gig.

Bank Statements: This helps them get a sense of your financial health.

ID: You'll need to prove you're you, after all!

Missed Payments and Hidden Fees

Here's the deal: during construction, you might be required to make interest-only payments. Miss those, and you could face penalties, potentially impacting your credit score. Stay on top of those payments to keep things smooth.

While they're not exactly hidden, there are some extra costs to be aware of. Think things like closing costs, builder fees, and sometimes even unexpected expenses like changes in construction timelines. It's smart to read the fine print and chat with your lender to uncover all the potential costs upfront. Transparency is your BFF here. No surprises!

Lower Property Appraisal?

If your property appraisal after pre-construction comes in lower than expected, it can affect a few things. First, it might mean you have to come up with more cash for a down payment, which can be a bummer. Also, it might impact your mortgage approval or terms. You can try to renegotiate with the builder, contest the appraisal, or consider if the property is still a good fit for your budget. Remember, staying flexible and talking to your lender are key to navigating these situations and making sure your home dreams stay on track!

Now That Your Home Is Built...

Converting a pre-construction mortgage into a regular one is pretty straightforward. Once your new home is all built and ready to move into, you'll contact Centum. We’ll guide you through the process. You'll need to provide updated financial info, like your income and credit score, to make sure you still qualify. Then, Centum will transition your pre-construction mortgage into a standard mortgage with the terms you agreed upon. It's like upgrading your phone plan when you're due for an upgrade – just a bit of paperwork, and you're all set in your new home with your regular mortgage!


Pre-construction mortgages can be your ticket to homeownership while locking in lower interest rates and potential savings. Just remember to keep those documents in order, be mindful of any hidden fees, and stay on top of payments during construction. With the right preparation, you'll be well on your way to turning that dream home into a reality.