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Do you offer a building or construction financing?

Construction financing

TD Canada Trust offers financing when a home is being built in stages and requires multiple advances of money over a period of time.  (This is not to be confused with a "Builder Mortgage,” which is used to purchase a newly built home from a builder/developer when the house is finished, and the borrowed amount is provided in a single lump sum at that time.) When considering construction financing, you will need to think about the following:

  1. Who will be building/renovating the property? Where applicable, the builder/contractor and the property must be registered under the applicable provincial New Home Warranty programs.  If a builder/contractor (or you as the owner) is planning to construct the house, you will need to consider the builder/contractor's ability to complete the project and any work you may intend to undertake on your own.
  2. How long will it take to construct the property? The maximum construction period is one year from the date of the first advance.
  3. What will construction cost? You need to have an idea of the total cost of construction. This estimate must include the land, building costs, site preparation including municipal services and finishing, and “soft costs” –  non-building costs such as interest, required permits, real estate/solicitor fees, etc. In many cases, unexpected costs may arise or you may wish to make changes, so you'll need to make provision for those as well.  It is recommended that you set aside an additional 15% of the estimated costs to cover unexpected overruns.
  4. How much equity (down payment) do you have available? From what sources? The minimum down payment required depends on the appraised value or cost to construct (whichever is less) and the amount you want to borrow (up to 65% of the value of the completed? home).  The down payment must be available at the time of application.
  5. When and how will the money be made available? Construction financing is advanced in parts (called “draws”) throughout construction via your solicitor. Three (3) draws will be permitted and are usually advanced when construction is approximately 35%, 65% and 97% complete.  Each time a draw is requested, the construction work completed thus far must be inspected by an appraiser to confirm completion to that stage.
  6. What documentation is required to apply? You should bring the following to your branch: 
  • Construction contract including costs 
  • Construction plans or blueprint of the home 
  • If self-building, all quotes for labour and material 
  • Site preparations including municipal services for the lot 
  • For the land, a confirmation of ownership: if purchasing, a copy of the unconditional purchase and sale agreement 
  • Confirmation of required funds to bring construction to 35% completion stage 
  • Confirmation of income/employment

Note: Other documents may be required.  Please contact your branch for further information regarding eligible properties, acceptable sources of down payment, payments during construction and following construction and applicable interest rates. You can visit your local TD Canada Trust branch for assistance with this financing.

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