Question:

Hello, We want to build a custom home in Ottawa or Aylmer area, and want your advice about bank loan. Question is: Can we get loan for custom home, with which we can buy lot and get a home constructed, and what are the conditions? Thank you, Ali (613) 738-5627

Answer:

The bank will finance a percentage of what you have in place. In other words, if they are financing only the lot purchase, they will likely give you 50% of its cost or value, if they are financing your home under construction, they will likely want you to get to the roof or closed in (weather tight) stage and finance 75% of the value of your work in progress, including the lot. Once the home is completed fully, they will advance the balance of the monies less 10% holdback for mechanics liens. That mechanics lien holdback will be advanced 45 days later. A rough rule of thumb is that if you are building a moderately priced home, you will need at least $35,000 cash to make it work smoothly. Bear in mind that deposits, permits, licences and fees will account for a major part of your initial expenses and use up the majority of your cash at the outset. John Lozinski (613)721-0010

Answered By: John Lozinski

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