Mortgage -- Building a new home

[vkesava1]

Hi there,

i am planning to build a home with homes by AVI Calgary. I contacted couple of banks, one of them told they can hold the interest rate for 12 months.

Will be able to change mortgage lender at the time of possession which will be 10 months from now, once the house is built.

Please let me know.

[Prelude_dude]

I'd recommend you use a broker. You don't pay them a dime and they do the work for you. Also they will shop around for you, if you shop around yourself, each bank you go to will ding your credit score.

I believe there are a few that will most likely chime in on here, or you can find one yourself.

In regards to the interest rate, the rate that the banks say they can "hold" right now will be an inflated rate that is not reflective of what you can actually get right now. They will probably tell you its like 3.5% or higher that they can hold.

They can only hold a good rate within 120 days to confirmed possession (this could be 90 days, i am hoping one of the brokers chime in on here and confirm or correct me).

[CapnCrunch]

Originally posted by vkesava1


Will be able to change mortgage lender at the time of possession which will be 10 months from now, once the house is built.



Assuming this is a question, yes you can change lenders closer to your move in date.

[Sugarphreak]

...

[vkesava1]

Thanks for your time and help.


yes they are holding a rate which is bit high than the market rate and they told me i will be able to switch to a market rate at the possession, if the market rate is lower at that time( 10 months from now).


oh. i didn't know, i can get the mortgage approval from one lender and i can switch lender at the time once house construction is completed and before taking possession, if some other bank can give me better rate.

Actually as per bank the mortgage gets activated right at the possession of house. they are not releasing funds at all. they are just holding the rate thats it.

so please confirm if i can change the mortgage lender or not ?

[Sugarphreak]

...

[TimLacroix]

Yes you can switch lenders at anytime... up to about 2-3 weeks prior to possession. NOTE: this is not necessarily good practice... but can be done.

As for 12 month rate holds, yes they are inflated. They can range from about 3.74% to 4.09%.

And yes, brokers will monitor rates and advise clients what the markets and rates are doing so that you can plan for what may happen during the 12 months.

We typically will also start revisiting rates about 6 months in advance as we have lenders with 6 month rate holds. Example today they are 3.34% to 3.49%.

Then at 120 days out... we get into very good rate hold protection. Each lender has different rate hold periods and rates for each of the rate holds.

Feel free to PM if you have more questions. Congratulations on your new purchase/ build!