Neha Joneja, Mortgage Agent Level 2 in Brampton, arranges construction mortgages for two different situations: building or heavily renovating a home yourself with a draw mortgage, and buying a new home from a builder in a Brampton or Peel subdivision. She explains progress draws, inspections, deposits, appraisal gaps and closing so your financing keeps pace with the build.
- 4.8 on Google (18 reviews)
- FSRA-licensed brokerage #13812
- English · हिन्दी · ਪੰਜਾਬੀ
- Women-owned
Which construction mortgage do I need?
“Construction mortgage” covers two very different situations. Start by finding yours.
| What differs | Building it yourself | Buying from a builder |
|---|---|---|
| Who manages the build | You, or a contractor you hire | The builder |
| How money flows | The lender releases funds in stages as work is done | You pay deposits; the mortgage funds once, at final closing |
| When you need the mortgage | Before construction starts | Close to the closing date, often years after you sign |
| Biggest risk | Running out of money before the home is finished | The home appraising for less than you paid |
Path 1: Building or renovating with a draw mortgage
How does a draw mortgage work?
A draw mortgage is approved for a total based on what the home will be worth once finished. The lender releases money in stages, called draws, after an inspector confirms each stage is complete. During construction you usually pay interest only on the amount drawn so far.
It suits a custom home on a lot you own, a knockdown and rebuild on an older lot in Downtown Brampton or Bramalea, or a major renovation or addition that needs more than a standard refinance. Rural builds on wells and septic north of the city follow the same structure; Neha’s Caledon mortgage page covers what lenders look for on those properties.
Where does the money come from before the first draw?
The first draw is released after work is done, not before, so permits, drawings, site preparation and early trades are often paid from your own savings. If you own the land, your equity in it can count toward your down payment, and some lenders advance funds against the land at the start.
At every stage, the lender also checks “cost to complete”: whether the remaining mortgage funds plus your own money can finish the home. If your budget runs over, the next draw waits until the gap is covered. Ontario’s Construction Act also requires holdbacks on payments to contractors, and your lawyer will usually manage these.
How a draw mortgage works
- Get approved on the finished value: The lender reviews your plans, City building permit, budget and builder contract, and appraises the home as if complete.
- Fund the early work: You cover initial costs from savings or land equity.
- Inspection at each stage: An inspector confirms progress, for example foundation, framing and roof, mechanicals and drywall, then completion.
- Draw released: Funds are advanced, usually through your lawyer, after a title search confirms no new liens.
- Final inspection and conversion: Once the home is complete and occupancy is approved, the loan becomes a regular mortgage with normal payments.
What you’ll need for a draw mortgage
- Proof of land ownership or the purchase agreement for the lot
- Architectural drawings and a City of Brampton building permit (or proof of application)
- A detailed construction budget and fixed-price or cost-plus contract
- Builder or general contractor details, including new home warranty enrolment where it applies
- Income documents and proof of your own funds for early costs
Path 2: Buying a new home from a builder in Brampton
Many buyers sign with a builder in the new subdivisions of north and west Brampton, around Mount Pleasant, the Gore Meadows area and Bram West. Here the builder carries the construction risk; your job is to have the mortgage ready when the keys are.
How do builder deposits work?
Builders usually collect your deposit in instalments over the months after you sign, and those deposits count toward your down payment. Keep every receipt and bank statement, because the lender will ask for the trail at closing.
When should I get my mortgage approval?
You can get a mortgage pre-approval early to understand your budget, but a rate hold won’t last until a closing date that may be two or three years away. Plan to apply a few months before closing, and avoid new car loans or credit cards until then.
What if the home appraises for less than I paid?
This is the appraisal gap. Lenders base the mortgage on the lower of the purchase price or the appraised value at closing. For example, you signed for a $1,000,000 home and planned on 20% down with an $800,000 mortgage. At closing, it appraises at $950,000. The lender will lend 80% of $950,000, which is $760,000, so you would need an extra $40,000 in cash. Planning early gives you time to set that money aside or compare lenders.
What is interim occupancy in a condo?
If you buy a new condo or a stacked or condo townhome, you may move in before the building is registered as a condominium. During this interim occupancy period, you pay the builder a monthly occupancy fee, usually made up of interest on the unpaid balance, estimated common expenses and estimated property tax. It doesn’t reduce what you owe. Your mortgage funds at final closing, after registration, which can be months later.
What closing costs come with a new build?
Beyond the usual 1.5% to 4% of the price for legal fees, land transfer tax and adjustments, a builder’s statement of adjustments can include items like utility connection fees and certain levies, depending on your agreement. Have your lawyer review the agreement before you sign.
Are there special rules for new builds?
Two federal changes help buyers of newly built homes:
- 30-year amortization on insured mortgages: Since December 15, 2024, buyers of newly built homes can stretch an insured mortgage over 30 years instead of 25. Amortization is the total time to pay off the loan. A longer one lowers the payment, and CMHC adds 0.20% to the insurance premium.
- First-time buyer GST/HST rebate: Legislated in 2026, this rebate can eliminate the GST on qualifying new homes up to $1 million for eligible first-time buyers, with a partial rebate up to $1.5 million. You may qualify; confirm with your lawyer and CRA before you count on it.
Key numbers
| Item | Figure |
|---|---|
| Minimum down payment, $900,000 new home (insured) | $65,000 |
| Minimum down payment, $1.5 million or more | 20% |
| Insured amortization, new builds | Up to 30 years |
| CMHC premium surcharge over 25 years | 0.20% |
| Closing costs to budget | 1.5% to 4% of the price |
Approval subject to lender criteria (O.A.C.). Rates subject to change. Examples are for illustration only.
If you’re buying your first new build, the first-time home buyer mortgage page covers FHSA and RRSP options for your deposits. Planning a legal basement unit in a new build to rent out? See the investment property mortgage page. All purchase services are on the buy a home page, and Neha explains every step in Punjabi, Hindi or English. Book a consultation before you sign with a builder or a contractor.
Frequently asked questions
Can I get a mortgage to build my own house in Brampton?
Yes, with a draw mortgage. You’ll need land, approved plans, a building permit, a detailed budget and your own funds for early costs. Money is released in stages as inspections confirm progress.
When should I apply for a mortgage on a pre-construction home?
Get a pre-approval early to confirm your budget, then apply for the actual mortgage a few months before closing, since rate holds don’t last years. Keep your deposit records and avoid new debt in the meantime.
What happens if my new home appraises lower than the purchase price?
The lender lends based on the lower value, so you cover the difference in cash. Planning early gives you time to prepare.
Do I pay a mortgage during interim occupancy?
No. You pay an occupancy fee to the builder until the condo is registered. Your mortgage starts at final closing, after registration.
Can the land I own count as my down payment?
Often, yes. Lenders can count your equity in the lot toward the down payment on a draw mortgage, based on its appraised value. The exact treatment depends on the lender.
Can I get a 30-year amortization on a new build?
If your mortgage is insured and the home is newly built, yes, since December 15, 2024. If you put 20% or more down, many lenders offer 30 years on uninsured mortgages too.
Sources
Prefer to talk now?
Or start your application in Neha’s app (opens in a new tab).
- 4.8 on Google (18 reviews)
- FSRA-licensed brokerage #13812
- English · हिन्दी · ਪੰਜਾਬੀ
- Women-owned
Last reviewed by Neha Joneja, Mortgage Agent Level 2, November 2026. General information only, not financial advice for your situation.