Draw Vs. Completion Mortgages

Draw Vs. Completion Mortgages

Posted: July 09 2021

Draw Vs. Completion Mortgages

What kind of mortgage do you need to build a Landmark Home? We’re asked this one all the time! Draw or completion mortgages? What’s the difference? Which is better?

Draw Mortgages

A draw mortgage is also known as a "construction mortgage", or a "builders mortgage". This kind of mortgage is used with some smaller home builders and individuals contracting their own trades. It allows. You to draw down the full mortgage amount at different stages of new home construction.1 Each time you finish a stage in your construction, you borrow the funds and this is referred to as a “draw”. The construction process is completed in phases, and you continue to take out draws until your new home is completed. A draw mortgage is preferred by some home builders because it allows them to receive portions of funds during predetermined stages of the build process. To obtain a draw mortgage, the beginning process is the same and you will have to go to your lender to be verified for the build to begin.2

One of the major points to consider with a draw mortgage is you have to start making payments on your draws as soon as the funds are released to the builder. In some cases, when a family is in the midst of selling their current home, they’re caught between making two mortgage payments. One payment for their current home, and a second for the various construction draws. When you build a Landmark Home, we do not require a draw mortgage loan!

Completion Mortgages

Now, the alternative is a completion mortgage loan. This kind of mortgage is far more traditional. For namesake, completion mortgage is quite literally a mortgage that is funded at the completion of your new home. Completion mortgages mean that the builder does not expect any funds until you take possession of your new home. Before the building process begins, you will have to go to your mortgage professional to get your application verified for the build to start.

The benefits of this option are that you don’t have to put down any payments before you take possession, you can add upgrades to the mortgage, and the lender doesn’t require all final information from you until 30 days before you take possession. During this build process you will want to take extra care of your finances to ensure nothing changes, which could put your initial approval in jeopardy. Any changes that could possibly change your financial position and your credit should be discussed with your mortgage professional. This can include things like switching jobs, buying a car, and taking out any new loan.2


1. “Construction Mortgages Explained: Learn How to Get Construction Financing to Build a House.” Ratehub.ca, www.ratehub.ca/construction-mortgage-loans. 

2. “COMPLETION VS DRAW MORTGAGES.” Alberta Mortgage Professionals, www.albertamortgagepros.ca/index.php/blog/post/80/completion-vs-draw-mortgages.


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