Build a Home

Like any mortgage, you want to ensure your monthly payments fit within your budget. This is particularly true with a construction loan – because you may be paying to live somewhere else while your new home is being built. During the construction phase, you want to keep expenses manageable and not incur any extra costs that might come with delayed construction.

• Managing expenses is easier when you choose a construction loan from TD Bank
• One closing at the start of construction
• Interest-only payments during the construction phase
• Flexible down payment options
• Lock interest rate at the start of construction

Plus: You can use a TD Bank construction loan to renovate your current home.

Your first step in securing a construction loan should be to talk to your TD Bank mortgage advisor. The amount you may borrow will be an important part of your discussions with your builder in deciding what to include in your new home. An advisor can also answer your questions about how construction loans are structured.

• To get qualified, you will need to provide your basic debt, income and asset information
• To apply for a construction loan, you will need to have a signed construction or purchase contract with your builder or developer. The contract will detail certain aspects that will impact your loan, such as:
  1. Contract amount, which includes construction and cost of land, if applicable
  2. Construction start and completion dates

A construction loan can include:

• An initial loan payment if you're purchasing land on which to build
• If you already hold a loan on the property where you're building, the first disbursement of the construction loan will pay off that loan before construction starts
• A 12-month construction phase loan with interest-only payments for you; the bank will make scheduled payments to your builder during this time
• Conversion to a fixed-rate mortgage after the 12-month construction phase
• A construction loan involves only one application and one closing that cover the construction phase and the permanent financing

If your new home construction is being financed by the developer or builder, then you will purchase your home from them and will not need a construction loan. You will follow the same process for buying your next home or buying your first home.

You may plan to use the proceeds from the sale of your current home to help finance the construction of your new home. Construction loans at TD Bank are structured to meet your specific needs, and a mortgage advisor can help you understand your best options when you discuss your loan qualifications and mortgage application.

Making the transition financially and physically into a new home can require some juggling. When it comes to moving from your current house to your newly built home, you can either:

• Wait to sell
  You may want to wait to sell your current home until you can move into your new home. To do so, you'll have to qualify for a new construction loan while still making payments on your existing home mortgage. If you already own the property where you're building, that can be used as equity for your new construction loan
• Sell now and rent
  Selling your current home before construction begins and living in a rental or other housing alternative until your new home is ready is another option. This makes the equity in your current home available for immediate use for your new construction and you'll only have the construction loan outstanding

Your TD Bank mortgage advisor can help you make the choice that is right for you.